Is it possible to finish University debt free?

Is it possible to finish University debt free?

With the recent budget announcement around the removal of maintenance grants to be replaced with additional student loans, a number of online outlets have begun reporting on the mountains of debt our university graduates will now be saddled with at the end of their degrees. Indeed; with tuition fees currently standing at £9000 a year, plus the costs of living.. it’s to be expected that many will graduate with well over £30,000 worth of student debt.

This got me thinking about whether it might be possible for a suitably prepared and motivated young student to pre-plan this debt mountain and instead avoid it entirely through working. Could it be theoretically possible that a normal UK student with no financial assistance from their parents manage to graduate without owing a single penny?

It’s an interesting concept, so let’s run the figures!

Meet Tim

Tim is by all accounts; a normal teenager. He’s 16 and has just finished his GCSE exams. Tim lives with his parent’s who will be supporting him while he attends 6th form and he previously had a small paper-round which has so far funding his modest purchases. Tim, like most young students, dreams of going to university but is horrified by all this media hype surrounding the inevitable mountain of debt every graduate will find themselves in. Tim’s a smart guy, even though he knows UK student loans are not essentially bad debt.. he’d still like to avoid them entirely and graduate without owing a penny.

Like your story-teller Mr ERG, Tim is prepared to work weekends/evenings whilst at 6th form and full time in the school holidays. Also because Tim is an Early Retiree in the making; he uses the bike he got for his 15th birthday as all the transportation he needs.

The 6th Form Years

Tim’s been lucky, he aced the group interview at the local supermarket and has been offered the pick of multiple shifts to start as soon as the school year finishes. While not the living wage, his supermarket does pay a slightly above-minimum wage of £5.13 for 16-18 year olds and offers a company pension scheme which Tim has opted out of.

Starting on the first day of the school holidays (July 25th), Tim works full time over the summer at the maximum legal weekly hour amount for his age at 40 hours a week up until the start of the school term again (Sept 6th). This gives Tim 6 weeks of work for the summer holiday. 8 hours a day for 5 days a week giving £205.20 per week, £1231.20 over the summer holidays. Tim also repeats this during the half terms, christmas and easter holidays giving another 6 weeks full time work bringing the ‘holiday’ total to £2462.40

Whilst at 6th form, Tim needs to tone down his workload a bit and so is only able to work 4 hours on the weekday evenings. He does this twice a week and continues working for 8 hours Saturday & Sunday. This gives him 24 hours worked each week, £123.12 per week for 40 weeks of the year. A ‘non-holiday’ total of £4924.80

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Thats £7,387.20 each year and or the 2 years at 6th form, Tim has managed to bank a pretty sweet £14,774.40

 

The Uni Years

Happy birthday Tim! It’s June 2017 and you’ve just turned 18. You finished your A-levels and are now no longer considered a ‘young worker’. This means that Tim is free to Opt out of the Working Time Directive and so work additional hours if he wishes. Tim finished his last exam in June and now has until Sept 21st before his university course starts.

Starting on July 1st, Tim works a full 8 hours each day for 6 days of the week for a total of 48 hours a week, or £246.24. He’s got 12 weeks this summer before university starts so that’s £2954.88. With Christmas, easter and reading weeks between, Tim has another 6 weeks of holiday work to give another £1477.44. Grand ‘holiday’ total of £4,423.32

Tim works hard at university but also manages his time well. Instead of partying all night he is up early to work on coursework and essays. Tim has managed to transfer to another supermarket branch in his University town. He decides to work 4 hours in the evening after university but on 3 days of the week, plus 2 full days at the weekend. Tim’s term-time hours are 28 per week, earning £143.64. He has 34 of these term weeks each year giving him £4,883.76

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That’s £9,316.08 per year and or the 3 years at university, Tim has managed to bank another £27,948.24

All together, Tim has made £42,722.64

The Costs

Annual tuition fees: £9000

Annual rent in house share: £2400 (£200 * 12)

Annual Food: £1300 (£25 *52)

Annual Bills: £520 (£10*52)

Annual Entertainment: £1040 (£20*52)

Total annual expenses: £14,260

Total expenses over 3 years: £42,780

 

Wow! I thought it would be close as I was adding up the figures but I never thought it would be that close! Tim is just £57.36 off of covering his 3 year university expenses! A couple of generous cash christmas/birthday gifts and he could well be over the line.

I know this has been a hypothetical situation, I know that Tim might occasionally want to buy and iPhone or go on holiday and that the figures might seem a bit extreme.. but the proof is there that it is possible. If Tim were to live back at home over the summer holidays, reduce his annual rent to only 9 months out of the 12 or even live at home whilst attending university.. all of this would help the finances even more.  The hours worked really aren’t that difficult to believe either; Whilst I was at 6th form I was working 14-hour double shifts almost everyday Saturday & Sunday plus many weekday evenings. At University I could well have worked more hours than Tim during the term times and I worked overnight shifts for double pay during the holidays. It replies upon Tim having continuous employment and the availability of shifts.

All of this has also excluded the possibility of investment. What if Tim had fully financed himself through the student loans but at the same time invested his earning and then paid it all off in 1 lump sum at the end? It’s an interesting thought.. I wonder if it’s crossed the mind of any undergraduates out there…

5 thoughts on “Is it possible to finish University debt free?

  1. Well done it is possible and I’m glad you showed it, also you could almost guarantee, that young Tim will be studying something useful and not just killing time before getting a job.
    So many young people brought up in this culture simply think they can go to university study what they wish then walk in to a good job with little actual work experience.
    He could save more money if going to a local university and living at home.
    Also young Tim with that attitude could most likely skip university and make his own way in the word and be retired in no time at all.
    Thanks for the post I will be sending it to a few people as inspiration lol

  2. It certainly is possible. And you have comprehensively proven it.

    I went into my original degree after having worked very hard during my A-levels and a gap year. It meant I went in with quite a nice cash pile. However, for me that was a safety net rather than a way of funding university. No one in my family could have helped me if I had run into difficulties so I had to have that for peace of mind.

    I should add that when my first degree pretty much perfectly coincided with the worst parts of the financial crisis. Good in some regards, but also meant I could not find any consistent and substantial employment which, of course, something that would put paid to the above example!

  3. University, as I remember it ,was a joyous, friendship forming, enriching experience that gave me an unforgettable time in my life and made me a more rounded member of society with ideals shaped by hours of conversation over halves of mild in the pub on a night, not an endurance trial as Tim may well find it. Times change (unfortunately). :-)

    1. Same here, Cerridwen.

      Although I was a little like Tim in that prior to going to Uni, I’d saved up my money from part-time jobs and ended up using my savings over the years, so I wasn’t in too much debt when I finished. I also held a weekend job during my studies, worked throughout summer holidays and lived in classic student accommodation of old (ie grotty, mouldy but cheap) – these days, many students want to live in luxury digs!

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