Information for Students about to Leave University
Reaching the end of your studies can be a time for both celebration and anxiety. You may be uncertain about what you will do next and even if you already have your next move well mapped out, you will almost certainly be stepping into relatively unknown territory.
The information below offers guidance for a number of practical issues you need to deal with when you leave:
You have probably been ineligible for state benefits such as Income Support, Jobseeker’s Allowance or Housing Benefit during your course. Usually only those students who have a disability or who have dependants can claim these benefits. Full time students are exempt from Council Tax and since April 2004 have been personally exempt. This means that even if you lived in private accommodation with non-students, you will not have had to pay Council Tax.
From the day that your course ends, you become eligible once again for state benefits. You also become liable for Council Tax. If you have not arranged employment beginning immediately after the end of your course, you must contact your local Jobcentre Plus Office in order to claim benefits—most likely Jobseekers’ Allowance (JSA). If your claim is successful, you will also be entitled to claim Housing Benefit (if you pay rent) and Council Tax Benefit. Even if the gap between the end of your course and the start of your job is only short, this is worth pursuing. You should make your claim at the Jobcentre Plus office where you are living when your course ends. If you claim in Leicester and then move elsewhere, your claim will be transferred to the new area office.
It is advisable to contact JobCentre Plus for advice a couple of weeks before the end of your course. This may minimise delays in dealing with your claim. You should also claim Housing Benefit and Council Tax Benefit at the same time—do not put this off, it is rare for claims to be backdated.
If you have dependents and you are moving directly into either part or full time employment, you should contact the JobCentre Plus for information about the full range of benefits that you might claim even though you are working. They will also be able to advise you about Tax Credits or, if you prefer, you may contact the Tax Credit Helpline: 0845 300 3900.
We cannot provide comprehensive details about all potential benefits so look at the useful addresses at the end of the article for places to find out more for yourself.
While you have been at university, you may not have paid any National Insurance Contributions. Most full time students leave university with a gap in their contribution record. The HM Revenue and Customs (HMRC), who now administers National Insurance, may write to you after your course has ended to ask if you would like to make a payment into your National Insurance account to bring your contributions up to date. It is not compulsory that you make this payment. You should seek advice from an independent advisor, such as your bank, when you are faced with this choice.
You will become liable to start repaying your loans in the April after you have graduated or left your course. The amount you repay will be linked to your income. Providing you entered university in 1998 or later, you will be expected to repay 9% of your annual income over a threshold of £15,000 per year. So, for example, if your gross income is £17,000 per year, your monthly repayment will be 9% of £2000, or £15 per month. See information about changes to these rules from 2012.
Repayments are deducted at source by your employer or through the tax self-assessment system for those who are self-employed. Interest on the amount that you owe will be linked to inflation – in line with the Retail Prices Index (RPI) – so the value of the amount you pay back will be broadly the same in real terms as the value of the amount you borrowed. You will not be expected to make any repayments if you are unemployed or if your income is below the threshold set by government.
If you started your course from 1st September 2006 and still owe all or part of your loan 25 years after you graduate, or if you become permanently disabled or die, the outstanding balance will be cancelled (but see information about changes due in 2012).
It is vital that you inform the SLC of changes of address so that they can contact you
Many students will have an overdraft at the end of their course. Banks offering student packages will also offer extended facilities for graduating students. You should contact your bank now to find out how they can help you as you move from study into the workplace. Your student adviser can give you information about when your overdarft will begin to incur charges, graduate bank accounts, graduate loans and how to manage the relatively large amounts of money that you may be earning as a graduate or postgraduate employee.
If you have had a student credit card, this may be costing a lot to service. Interest rates on outstanding balances are high in comparison with other types of borrowing. Talk to your bank now about how you might manage this debt after you graduate.
Try to resist the temptation to spend on your card now in the expectation that you will soon be in a position to afford to pay it off. Even if you already have a job lined up, don’t forget that you may be about to incur many more costs than you had as a student. Once you start full-time employment, you will become the target of mail-shots from all the large credit card companies. Many graduates find that they are offered a lot of credit very quickly after taking up their first job. This can be very tempting, particularly if you have to deal with the costs of moving, buying new clothes for work and increased transport costs. If you have financial needs on graduation, talk to your bank about cheaper loan options before spending on a credit card.
You may also be able to transfer any credit card balance onto a new 0% interest card for a limited period to help ‘buy’ more time to repay the debt - credit card companies normally charge for balance transfers so you need to ensure the saving is worth it.
See the Money Saving Expert website for further banking tips.
Now is a good time to think about any other debts that you might have and start looking at ways of managing when you leave university. There are various debt advisory services who can help - make sure you only approach reputable organisations who do not charge! The addresses of some national organisations are given below.
If you are continuing in education and have debts, you are strongly advised to talk to the student adviser at your bank or to the Student Welfare Service before embarking upon another course of study.
See our separate web page about potential funding for postgraduate study.
Even if you do not move immediately after finishing your studies, it is likely that you will do so in the next year. You will need to consider the cost of moving. Deposits and advance rent for a room in a shared house in the southern counties or in London, for example, can be extremely high. Talk to your bank in good time about this major cost. Don't forget, you will become liable to pay council tax.
- HM Revenue and Customs (HMRC) for Income Tax, Tax Credits and National Insurance information