One of the most important lessons that your university experience will ever teach you is how to budget.  Unfortunately, this is often learnt the hard way.  Living alone for the first time is probably completely new to you, and it’s all too easy to overspend, break the bank, and find yourself running out of money well before the end of term.

Some of the unfortunates that spend their student loan before they finish studying are lucky enough to have parents who can help them out of their mess.  Others have savings to fall back on.  Some, however, find themselves up the creek without a paddle.

For these unlucky students, borrowing is the only way to make sure that there’s food in their bellies without having to drop out of university.  If you find yourself in this situation, then it pays to understand your options.  To help you out, here’s a short rundown.

Overdrafts and Overdraft Extensions

The best way to borrow money is by taking it out of your overdraft.  For students, this will usually be interest free, meaning that there are very few downsides.  Unfortunately, most students simply see this as an extension of their loan, and don’t realise they’re in trouble until they’ve maxed it out.  For some, an overdraft extension will be available.  However, the downside of this is that interest may well be charged, and most banks will be unwilling to up your threshold by more than £500.

Photo Credit: “Deciding How to Pay the Bills”, © 2011 Fairfax County, Flickr | CC-BY-ND | via Wylio

Credit Cards

Another option is to apply for a credit card.  Most people will be approved for one, although students may find themselves in the minority that are not.  Although these are a useful tool for building a credit record as much as borrowing, they’re likely to have high interest rates attached to them, and will usually need repaying in full within six months to a year.  These strict repayment terms mean that they can be unsuited to a student lifestyle, especially if you’re unlikely to have any real income aside from grants and student loans until you graduate.

Personal Student Loans

Personal student loans, available from companies like Smart-Pig, offer a third alternative.  Although these will carry interest rates, most of these borrowing options have been specially formulated to suit students such as you.  This means that they often carry grace periods of around 7-10 days, place a cap on interest rates, and have a good understanding of how quickly you’ll be able to make repayments.  As an added boon, you can often access the money you need in less than 24 hours.

If you’re forced to consider your borrowing options, which of these three choices would be best suited to your needs?