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Helping out the student in your life

It’s that time of year again when university applications are in, and there's a whole year group of students across the UK beginning the only too short few months of school before waiting to find out if they got their grades for university.

If you’re a parent or grandparent to one of these 17-18 year olds, you’re also probably trying to wait patiently before finding out what lies in store for them.

You don’t have to sit on your hands for the next few months though. There are things you can be putting place to prepare for the exciting few years ahead of them, including figuring out which student bank account might be the best option for them.

There’s plenty of choice so we’re taking a look at the things your teenager will need to bear in mind before opening an account, and which ones offer the best facilities.

Think about credit

The chances that the teen in your life is aiming to get through university without running up at least some debt, are probably pretty slim.

Obviously the hope is that they will be sensible and not overspend, but equally there are lots of expenses that come with going to higher education.

Add to that the opportunity to take advantage of 0% interest-free overdrafts, and it’s easy to see why it’s important to make sure the account they choose has a good borrowing facility built-in.

Most 0% overdraft facilities build over the duration of the course. For example, a £500 facility may be available in the first year, and this will increase up to £2,000 to £3,000 in the third or fourth years. Similarly, some accounts follow the same pattern after graduation, gradually reducing the 0% overdraft facility over the two to three years after finishing university.

Beware however, some 0% facilities stop abruptly upon graduation.

Think even more about credit!

Some bank accounts will also try to interest your child or grandchild in a credit card.

According to FENews, 15% of students leave university with debts on top of their student loan, of over £10,000.

Being a student is an expensive business, and owing to the long hours most students need to spend studying it isn’t always feasible for them to also have jobs on the side to help keep their finances afloat. But accruing debts is also obviously not a great start in life once they’ve left and hopefully started their career.

If using credit facilities is going to be a core strategy for financing your child or grandchild through university, then be smart. Think about how this is going to be paid off once they leave. Any attractive introductory interest rates are going to be replaced very swiftly after graduation with the onerous usual rates payable. And they are unlikely to have a great credit score so swapping to a different card with a better rate might not be an option.

What about proof?

To be eligible to open a student account your child or grandchild is going to need proof they are a student. They don’t have to be 18 yet, but they will need to be able to show they have been accepted onto a course.

UCAS used to supply something called an AS12 letter and this was the usual way to prove this. This has now been replaced by a 16 digit UCAS status code which will be provided via email.

The would-be account holder will also need the usual forms of ID, such as proof of address and some form of photo-ID. Most banks enable online account opening, without having to visit a branch.

Thinking ahead

Three years may seem like a vast amount of time when you’re leaving school and just starting out in the world, but as anyone over the age of 25 knows it goes by in a flash. You may be helping your child or grandchild pick a student account today, but it won’t be long before their going to need a different type of account.

Some student accounts will let holder roll onto graduate accounts, and in so doing retain some of the facilities that they have enjoyed as an undergraduate. But remember, this is a key time for banks to recruit customers, so it is likely they will find a very competitive offer from another bank account provider. The key is to just be aware of what the terms and conditions are going to be if the account is rolled over, and what other options are out there.

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February 2024