So, what is a budget and how can it help me at uni?
A budget is a financial plan that helps you manage your money by balancing your income against your expenses. It allows you to track how much money you have coming in and how much you’re spending, helping you make informed decisions about your finances.
How will I afford uni?
Before diving into how you can calculate your budget for uni, lets quickly mention how student loans work in the UK.
Most students in the UK don’t have to pay tuition fees upfront. Instead, they can apply for a Tuition Fee Loan through Student Finance England. This loan covers the full cost of tuition, which is paid directly to the university or college in three instalments throughout the academic year.
While the Tuition Fee Loan takes care of your tuition costs, the main expenses you’ll face at university come from living costs. These include accommodation, food, transport, course materials, and social activities.
To help with these expenses, you can apply for a Maintenance Loan, which is paid directly into your bank account at the start of each term. The amount you receive depends on your household income and where you live while studying. Living costs can vary significantly depending on your lifestyle and location. On average, students spend around £1,104 per month on living expenses, with rent being the largest expense.
Your maintenance loan will likely be your main source of income whilst at university and is paid to you at the start of each term. It is important to spend your loan carefully to make sure your instalment lasts the whole term. This where a budget can help you stay on track and ensure you don’t get into any financial trouble.
What is the difference between Income and Spending?
- Income = all the money you receive, such as your Maintenance Loan, part-time job earnings, scholarships, and any financial support from family.
- Spending = all your expenses, including rent, food, transport, course materials, social activities, and any other costs you have to pay such as household bills or subscriptions.
So how do I calculate my budget for uni?
- List Your Income: Write down all sources of income and the amounts you expect to receive each month.
- List Your Expenses: Make a detailed list of all your monthly expenses. Include fixed costs like rent and variable costs like food and entertainment.
- Compare Income and Expenses: Subtract your total expenses from your total income to see if you have a surplus (extra money) or a deficit (shortfall).
Here is an example:
Please note that the maintenance loan has been split out per month, you can do this calculation by finding out how much you can expect to get each term and then dividing this by the number of months in your term (this number can vary based on what uni you go to)
Income per month amounts (£)
- Maintenance Loan (per month): 800
- Part-Time Job: 300
- Scholarship/Grant: 100
- Financial Support (Family): 400
- Total Income: 1600
The total income per month minus the total expenses means you would be left with a budget surplus of £70 for this month. This is good as it means you have kept within your spending allowance and can carry over your surplus to the next month.
Budgeting will help you enjoy the entire year – not just the first few weeks.
By making a budget to track your spending at uni, you can make sure that your money will last for the entire term, it is important to do this as once you spend your maintenance loan you won’t receive your next instalment until the next term.
Understanding your budget can also help you decide if you need to reduce your spending (expenses) or if you need another way to increase your income, like through a part time job for example. If you are spending more than you are earning at the start of the term, then you will run out of money. So make sure to track all of your spending, this includes one off purchases such as clothes or social activities.
Expenses per month amounts (£)
- Rent: 700
- Utilities (Electricity, Water, Internet): 100
- Food: 200
- Transport: 50
- Course Materials: 50
- Social Activities: 150
- Personal Care: 50
- Subscriptions (Gym, Streaming Services) : 30
- Total Expenses: 1330
Think about if an item is something you need or just something you want, doing this will help you curb unnecessary spending. There are also helpful tools online to help you budget including our budgeting tool provided below.
By making a budget and sticking to it, you can ensure your money lasts for the entire term, reducing financial stress and allowing you to focus on your studies and enjoy your university life. If you find yourself struggling, don’t hesitate to seek financial advice from your university’s support services. With careful planning and discipline, you can achieve financial stability and make the most of your uni experience.
Check out our #GetUniReady campaign for more tips and information about managing your budget and uni and making the most of your university experience!
You can also check out our article packed with information about how to sort your finances for living independently and explore our Child Trust Funds article if you recently turned 18 and want to see if the government set up a savings account for you!
Looking for more budgeting tips? Check out our budgeting for a holiday article!
There are helpful tools online too, like the Save the Student budget calculator.
Repayments: what happens after graduation
This is the part that often worries people most, but it’s also the part that’s most misunderstood.
Here’s the key thing with student loans: you only start repaying when you’re earning over a certain threshold. In England, that’s currently £25,000 a year. Earn below that? You don’t pay a thing. No phone calls, no missed payments, no impact on your credit file.
Your repayments are based on what you earn, not what you borrowed. Let’s say you earn £28,000 after graduating. You’ll repay 9% of everything above £25,000 — that’s £270 for the year, or about £22.50 a month. It comes straight out of your payslip automatically, just like tax.
Student loans also get written off after a set number of years. The exact timeframe depends on which plan you’re on and when you started, but it’s often 25-40 years after your first repayment was due.
What about interest?
Interest rates on student loans can sound alarming. Your balance might actually grow while you’re repaying it, depending on which plan you’re on and your income. But this doesn’t change your monthly payments – you still only ever pay 9% above the threshold. It can feel frustrating to see the total going up, but it doesn’t affect your day-to-day finances.
Will a student loan affect my mortgage or credit score?
Student loans don’t appear on your credit file like a credit card or other debt. They won’t stop you getting a mortgage. Lenders do factor in your repayments when calculating affordability but that’s true of any regular monthly commitment.
“The language around student finance often sounds scarier than it needs to be. When people understand it’s income-contingent, meaning you only pay based on what you earn, that anxiety starts to lift. You’re not going to be chased for money you don’t have.” Georgia Markou, The Brilliant Club
Summary
Getting financially ready for uni doesn’t mean having it all figured out. It means knowing enough to make confident decisions and knowing where to turn when things feel unclear.
To recap:
- Student finance is made up of two loans: one for tuition (paid to your university) and one for living costs AKA maintenance (paid to you). Your maintenance loan is means-tested based on household income.
- Budgeting for uni is about balancing what comes in against what goes out. Make a plan at the start of each term and track your spending throughout – your loan has to last until the next one arrives.
- Repayments only kick in once you’re earning above the threshold after graduating. They’re automatic, income-based, and get written off after a set number of years.
If you ever find yourself struggling, your university’s student services and hardship funds are there to help. Free, confidential advice is also available from Citizens Advice and the National Union of Students.
At Money Ready, we believe financial education should be a right, not a privilege. The more you know now, the more confident you’ll feel later.