New undergraduates should look beyond the marketing ploys, writes Gabrielle Monaghan
Midweek parties, long lie-ins and newfound freedom from parents may be on the horizon for many of the almost 51,000 students who received their Leaving Cert results this week as they gear up for college life. However, school-leavers contemplating carefree years at third level should start considering how they will manage their finances for the first time in the face of increasing living costs.
The average cost of living for third-level students in Ireland is €157 a week, with students now spending almost €6,300 each academic year on accommodation, travel, groceries and socialising, according to a new Ulster Bank survey.
Students who pay rent spend an average €293 a month, or 42 per cent of their total income, on accommodation, the survey showed. The Union of Students in Ireland (USI), though, estimates students will pay as much as €500 a month to share a house or flat this year, and up to 30 per cent more if they live in cities.
The USI warned earlier this month that thousands of school-leavers bound for college this autumn may be forced to drop out of their courses within months, as soaring rents for student accommodation put low-income students under mounting pressure to make ends meet.
Ulster Bank found that parents fund more than half of their offspring's income while they are at college, with 30 per cent coming from part-time work. Almost one-quarter receive a grant of some description, though just 16 per cent of Dublin students get financial assistance compared to 31 per cent of students in colleges outside the capital.
Those who live away from home spend 21 per cent of their income on socialising, compared to 29 per cent for students who don't rent. Outside of accommodation and socialising, Irish students spend 18 per cent of their money on groceries, 13 per cent on transport and travel, and 2 per cent on clothes.
While the majority of this year's crop of first-year students will have to manage on a tight budget, banks are falling over themselves to court these new potential customers with incentives such as free texts, phone credit and tailored accounts.
After all, today's debt-saddled students are tomorrow's high-earning professionals and, given the perceived hassle involved in switching banks, many student customers may remain for decades with the bank they choose as teenagers.
"The banks, like any service, are trying to sell as much as possible, so our advice to students would be to shop around," said Kelly Mackey, the USI's welfare officer.
"Students have to watch out that they don't get too enticed by these promotional items or discounted credit cards. Decisions made about banking now may have ramifications later on in life."
Ulster Bank is offering students an interest-free overdraft of up to €650, on request, as well as a credit card, Laser card, transaction-fee free banking and "low-rate" student and travel loans. Permanent TSB's student package includes free foreign exchange transactions, an ATM card, vouchers that will allow students to buy online without the need for a credit card, and no transaction fees.
Meanwhile, Bank of Ireland is tempting students with an interest-free travel loan of up to €2,000 and an interest-free advance overdraft, both over a nine-month period, as well as the option to apply for a credit card with a limit of as much as €850. It's also offering a student discount on foreign exchange services and loans at a discounted lending rate of 9.5 per cent APR.
Bank of Ireland's free travel card will give students discounts on Dublin Bus, Irish Rail, the Luas and Bus Éireann, as well as 10 per cent off at HMV and Topshop and a 25 per cent discount at Specsavers.
Allied Irish Banks's student package includes loans at a rate of 8.99 per cent APR, a reduced rate overdraft of 10.33 per cent APR, interest of 0.025 per cent paid on credit balances and a credit card with an introductory APR of 6.9 per cent on purchases for the first 12 months.
National Irish Bank's Freedom package applies to both students and those starting their first job. Its four-in-one current account combines an ATM card, Laser card, cheque guarantee and Maestro. The bank said it won't charge students commission when they buy foreign currency in a branch and it can offer an overdraft of up to €5,000 without a set-up fee.
"Students should realise that if they are tempted by offers by more than one bank and open more than one account, there will be Government stamp duty on the second Laser or credit card," said Jill Forde, spokeswoman for the Irish Financial Services Regulatory Authority.
The two biggest banks, AIB and Bank of Ireland, are also competing for student business by offering to reduce mobile phone bills. That's because almost 90 per cent of students own a pay-as-you-go phone and spend an average of €41 per month on top-ups, according to Bank of Ireland research.
AIB is wooing first-year students with the prospect of €50 worth of free call credit when they open a Student Plus account. However, in order to receive the phone credit, students have to use the AIB Text Top Up service twice and make 10 transactions on their account before December 31st. The free call credit, which can be used for either calls or texts, won't be credited to their mobile until January 31st, 2007. Bank of Ireland, not to be outdone, is promising 700 free texts if first-year students sign up before October 25th.
Rather than falling for the most tempting incentive, students should base their decision as to where to open an account on the best overall banking package available, the financial regulator advised. It will release a detailed survey next week on the different student banking packages, which will be available on www.itsyourmoney.ie.
"Many students will be opening accounts for the first time, but they should look beyond marketing ploys such as mobile top-ups and look at the products themselves," Ms Forde said, "especially charges they may incur on unauthorised overdrafts or whether it would be cheaper to take a personal loan rather than use a credit card."
