Many fresher students have just begun their first year of University and many may already be picking up bad habits when it comes to unsecured borrowing – make sure your children aren't going down the wrong financial path early on.

The key is to be open with the freshers, talk to them abut the pitfalls they may face with rising debt and do all you can to get them into good spending and saving habits. This is easier said than done, with 19% of students surveyed by Equifax saying they hide the level of their spending and debt from their parents and even their partners.

However, the majority of students who responded to the Equifax survey seem to think they will have limited debts once they graduate. A third expect to have a student loan of less than £5,000 with a further 33% expecting to have a student loan of between £5,000 and £15,000. Of course, not many factor in the spiraling unsecured debts that mount up alongside student debts – debts that may land on your plate if they spiral too far and too quickly.

Neil Munroe, external affairs director for Equifax says: “Our survey of students suggests that many heading back to university this week could find themselves struggling if they don’t keep a keen eye on their finances. Although 77% said they don’t incur bank charges from missed payments and unauthorised overdrafts, 19% only pay the minimum on their credit card each month which could mean they are storing up a mountain of debt that will take a long time to pay off when they graduate.

“Those only paying the minimum each month will see interest mounting, pushing them further into debt. We urge students to manage their finances from the first week of term to ensure they minimise the risk of falling into serious debt.”

So the key is to start hammering home the problems of debt early – nearly 40% of students who responded to the Equifax survey haven’t reviewed their spending since the recession and, worryingly, 30% don’t know how much they spend on credit cards and their current account until their statement comes in each month.

Munroe says: “Understandably, 35% are worried about repaying their debts while studying, while 42% are worried about paying debts off after they have graduated. Indeed, more than a third plan to move back with their parents to help them manage their finances at the end of their course.

“Students should aim to start their time at university debt-free for the best chance of graduating in a strong financial position. There’s clearly a lot of financial pressure and the recession just adds to those worries. However, with a bit of planning and careful management, students can stay in control of their finances.”

SOURCE: Equifax, 05/10/09

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