(Evening Standard Via Thomson Dialog NewsEdge) FIRST the good news: graduates are less likely to be unemployed and more likely to earn higher salaries over their lifetime than non-graduates.

According to findings from the Higher Education Statistics Agency (Hesa), 93 per cent of graduates across the UK are in jobs or further study only six months after graduation and there is evidence that the proportion in work tends to increase further in the subsequent three years. In fact, graduates earn more over their lifetimes than non-graduates and, according to some analysts, the difference between graduate and non-graduate earning is, on average, 50 per cent.

But the promise of future riches won't necessarily sweeten the pill for students wanting to start university this autumn - the first academic year for which the new GBP3,000 annual top-up fees will be a factor. According to the National Union of Students (NUS), this year's freshers will graduate in three years' time with debts of more than GBP20,000.

Students must raise enough finance through grants, loans, bursaries, savings, parents or work to cover top-up fees, plus the cost of living and any books or course materials they may need. The NUS produces an annual cost-of-living index, which estimates that it cost GBP8,810 to study outside London in the last financial year and GBP10,493 in London.

The threat of debt is, in turn, having an impact on universities and, in some cases, the courses that students apply for.

More students are choosing to live at home while studying, particularly in London, and there has also been a growth in part-time study and distance-learning courses. The Open University, traditionally seen as more appealing to mature students, is reporting a significant increase in students in the 18 to 24-yearold age bracket.

According to a report last month, one in four of the brightest pupils from state schools say they have been put off higher education by tuition fees. It found that 27 per cent of 7,000 students in their penultimate year at school said they were less likely to go to university following the latest fees rise.

But the cost of your investment should be seen as an investment in your future.

By learning how to budget and being sensible, you can limit your debt while still enjoying student life. Here are some of the funding options available to you:

Grants Annual maintenance grants of up to GBP2,700 are available to new fulltime students from less well-off backgrounds.

Your eligibility depends on your household income - that's how much you, your parents or any other adult living with you earn. If your household income is below GBP17,500, you are eligible for a full grant. If it's more than GBP37,425 you get nothing.

If your household income falls between these two figures, you may qualify for a proportion of the full grant.

Check out www.directgov.uk/ studentfinance for a useful calculator to help you estimate what you might be eligible to receive in grants and loans.

EVENING STANDARD Student loans The Student Loans Company offers two kinds of loan, and you can apply for both on one form. The first covers the fees bill, up to a maximum of GBP3,000. If you apply for this loan, the money is sent directly to your college (otherwise your university will send you a bill directly).

The second type of loan is designed to cover your living expenses and how much you get will depend on where you live and your parental income. As a student living in London, the maximum loan available to you will be GBP6,170.

All students automatically qualify for 75 per cent of this amount (GBP4,628) but the top 25 per cent is means-tested, like the grant.

Outside London, the maximum loan will be GBP4,405, again with the top slice means tested, giving everyone access to GBP3,303.

Finally, if you choose to live at home, you can borrow a maximum of GBP3,415.

Interest is fixed each year and is linked to inflation. In the academic year starting 1 September, the rate will be 2.4 per cent, which makes it very attractive in comparison-with commercial lenders. You don't need to repay the debt until you are at work and earning more than GBP15,000 a year. Money is then deducted from your salary at a rate of nine per cent a year.

Every time you receive a pay rise your student-loan repayment will also go up.

The debt will be written off if any money is still owed 25 years after leaving.

If you want a student loan in your bank account by the start of term, you need to apply by 30 June. For students going through clearing, applications can still be made after this date but there is no guarantee about when the cheque will arrive. You can apply for loans and grants via this website: www.direct.gov.uk/studentfinance.

The Bank of Mum and Dad According to a report by the Royal Bank of Scotland, parents subsidise their offspring who have chosen to go to university by an average of GBP773 in their first year. Even if your parents are ready to fully fund your university fees and living expenses, it pays to take out a student loan because the interest-rate charges are significantly lower than what you could earn by depositing the money in a high-interest bank account.

Overdrafts Most banks offer students interest-free overdrafts of up to GBP2,000, normally spread over the years you are studying, and some sort of incentive to join up - such as a free five-year young person's railcard.

Barclays, for example, offers a GBP200 interest-free overdraft when you open an account, with further interestfree limits available up to GBP2,000 (in year one, up to GBP1,000, in year two, up to GBP1,250, year three, up to GBP1,500, year four, up to GBP1,750; and year five and above up to GBP2,000).

You can also apply to extend your overdraft over your interest-free amount up to GBP3,000 at a preferential typical interest rate of 8.9 per cent (variable).

Barclays has student relationship managers in selected branches, gives you a

Connect card with a daily withdrawal limit of GBP300 and access to online and telephone banking. Its student package includes free mobile phone insurance for your first year of study, 20 per cent off at selected restaurants and a three-year National Express Coachcard, offering discounts in the UK.

Shop around Your first priorities should be the location of your bank and access to your cash: is there a branch close to your campus that has a free cash machine?

Many universities have machines which charge around GBP1.65 per withdrawal; fees of this kind could affect your already delicate balance.

Bursaries Bursaries are the big new financial scheme this year. If a university is charging full fees of GBP3,000 (and there are only four that aren't), they have to provide bursaries of at least GBP300 for the poorest students (from families with earnings of under GBP17,500), but families on incomes up to GBP37,425 can apply.

Oxford and Imperial have bursaries of up to GBP4,000 a year, while Bristol pays up to GBP4,600. These bursaries far outstrip the sums on offer at the newer universities - such as a GBP650 maximum at Salford and GBP300 at De Montfort.

The Government predicts that bursaries for the coming academic year will average around GBP1,000. More than GBP350 million is available in scholarships, bursaries and awards to go towards living costs and tuition fees - and not all are means-tested. According to educational publisher hotcourses.com, almost 80 per cent of financial support comes from academic institutions, but companies, charities and professional bodies also provide funding.

Copyright 2006 Evening Standard. Source: Financial Times Information Limited - Europe Intelligence Wire.

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