THIS Thursday thousands of A-level students will find out if they have made the grades to win a place at the university of their choice. But amid the jubilation and despair of A-level results day, spiralling debt and money worries can cast a pall over even the most sparkling results.

Alex Sykes, 18, needs an A grade in A-level maths to do a civil engineering course at Brunel University. Even before securing her place, Alex, left, is working out strategies to minimise her looming debt.

Higher education has become the harshest kind of financial education, with the average graduate debt currently standing at £13,500. Changes to the tuition fee system next year will mean that new undergraduates will be even more indebted, paying up to £3,000 a year in fees and owing an average of more than £20,000 by the time they leave university. With this level of debt on the horizon, today’s students need to grow up fast.

The first financial priority is to find the right bank account. Banks are keen to attract students because of apathy in the current account market — if they have you as a student, they will probably have you for life. Offering flashy freebies is the traditional method used to grab the attention of impoverished 18-year-olds. Some, such as the free five-year railcard from NatWest, are more worthy than others, but you should not base your decision on the free gifts.

As a student, your bank account is unlikely to be in credit for very long, so in-credit interest rates are largely irrelevant, says Sue Hannums, of Chase de Vere Financial Solutions, the independent financial adviser. “The overdraft rates are far more important,” she says. “If you have any spare cash, don’t leave it in a current account — use a savings account, where you can earn about 5 per cent interest.”

The banks offer similar overdraft limits, which generally start at £1,250 in the first year and rise by about £250 each year. Halifax this year increased its first-year limit to £1,750. The most important considerations are the authorised and unauthorised rates that you will be charged for going over your interest-free limit. NatWest will not charge any interest if you obtain its permission first, but it will charge 17.8 per cent if you slip into the red by mistake.

HSBC has the lowest rate for unauthorised overdraft spending, at 14.8 per cent. Royal Bank of Scotland and Lloyds TSB charge 29.8 per cent. You may also be charged a fee each time you make a payment. Royal Bank of Scotland, Lloyds TSB and HSBC charge up to £30 a time.

Some banks will offer a fee-free credit card with a limit of £500 as part of the student deal. Steer clear of other cards, especially store cards. Nick White, at uswitch.com, says: “The best rates on the market are rarely available to those at university, primarily because many providers are unwilling to lend money to people without a good credit rating. Those on offer, such as Student Barclaycard, have high rates.”

Instead of borrowing yet more cash, look for other sources of funding. If you are in urgent need, you could be eligible for a hardship loan through your university. To apply, you must have received the maximum amount of student loan available. The loan will be repayable alongside your student loan after you have graduated and are earning more than £15,000.

If you have to work part-time or during the holidays, make sure that you know your employee rights. For workers aged 18 to 21, the minimum wage is £4.10 an hour, which rises to £4.25 in October. As a casual employee, you will accrue holiday and should be paid for any days not taken. Make sure that your employer has put you on the right tax code. Some will put you on an emergency code if they are not sure of your status, which means that you pay more tax than you owe. You should receive a rebate automatically at the end of the tax year. If you do not, contact your tax office. There should be no tax to pay on earnings up to the annual personal allowance, which is now £4,895.

Alex Sykes has accepted that she will have to work part-time. She says: “I like the independence and security that having my own income gives me, but I think it is sensible to stay at home if possible. Accommodation can be expensive, especially in London.”

Good sources of further information are The Student Finance Guide by Sean Coughlan, which is published by Ucas and on sale from August 18 at £9.99, and a guide to managing finances for students and graduates, produced by the Financial Services Authority and available at www.milkround.com. For advice about student loans, visit www.studentsupportdirect.co.uk.

• Read The Times Student Guide 2005 on Thursday

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