How to borrow sensibly

What is the best way to borrow money?

Medics study long, intensive courses so tend to graduate with more debt than other students. According to the British Medical Journal’s latest figures, the average medical student’s debt on graduation is £22,635. And this is set to rise as a result of annual tuition fees of £3000+ which do not have to be paid up-front but can be taken as additional student loans (if this is your first degree).

If you’ve never experienced an overdraft, loan or mortgage before, the thought of ending up thousands or even tens of thousands of pounds in debt can be a source of anxiety. However, many students develop from debt-averse sixth-formers to credit-happy freshers before you can say the words ‘student loan’. Some of this is due to the shift in attitude toward debt (this not just seen amongst students) but is mostly down to the big gap between the actual cost of living and potential student income.

Our research shows that for many students, parents are a key source of additional financial support and interest-free loans. But students, in particular those whose families cannot afford to fund them, are increasingly graduating with other sources of debt such as credit cards and bank loans.

If you do need to borrow money to fund your studies (and the vast majority of students do) there are a couple of things to bear in mind:

• Cost of borrowing (interest is usually stated as APR - annual percentage rate)
• Terms and conditions of repayment - how soon, how much, how long?

So what are the options?

• Student Loans
• Student bank accounts and overdrafts
• Professional Development Loans
• Credit cards
• Interest-free loans from charitable trusts