Students face a "perilous way of life" (From Yeovil Express)

Students face a "perilous way of life"

6:00pm Saturday 15th August 2009 in Search By Steve Sowden

DEBT could become a perilous way of life for thousands of the brightest school and college leavers in Yeovil and surrounding area if they lack the knowledge and confidence to manage their personal finances.

That’s the stark warning issued by Nigel Boobier, regional chair of the insolvency trade body R3, as students bank on A-level results providing a passport to higher education together with government loans which will see the majority leave university between £15,000 and £20,000 in debt.

“The class of 2009 has a lot to learn in terms of managing its finances,” says Nigel, an insolvency practitioner with Osborne Clarke.

“Britain is experiencing steep increases in national levels of personal debt and insolvency and graduate debt is reported to be running at around £26 billion – a 31% increase on 2007 figures.

“Ironically, while the current system for financing higher education relies on loans for tuition fees and living costs, little has been done to equip students with the skills they need to understand the meaning of debt and manage their money successfully.

“In a few weeks time these young people will have their first taste of independent living with finances in the red from the outset.

"In addition to their loans, many will also have significant overdraft facilities on bank accounts and be strangers to the notion of saving a little of the extra cash they may be able to earn from part-time employment.

“Unfortunately, the ‘buy now, pay later’ culture is what many of this generation have grown up with and the impact of the recession means that many families who may have been able to lend a helping hand are experiencing financial hardships of their own.

“We have to break the cycle and instigate behavioural change by educating young people and instilling a culture whereby the only accepted route for personal finances is ‘back to the black’.

“The possible consequences of getting into bad habits and racking up unmanageable debt are very serious indeed and I firmly believe that financial education should be a compulsory part of the school curriculum, perhaps with a qualification to sit alongside other GCSE subjects.

"After all, money is something we all come into contact with pretty much every day of our lives!”

R3 has been working with the IFS School of Finance charity to run pilot schemes across the country in support of the call for formal qualifications in financial education.