Session 3a: Credit & Debt

Scene: Bank• Task 1: Starter• Task 2: Quick Fire Quiz• Task 3: Double Dare Debt• Task 4: The Money Muddler• MISSION:CREATE: Credit Card Advert

AT THE END OF THIS SESSION...Your team will create a guidance plan for your young person about whether they should go to

university and how to get through it with as little debt as possible. Your guidance should be

clear and specific to your young person.

Credit Cruncher

vs

Quick Fire Quiz

Interest

Interest rate

Credit CardDebt

Loan (Student)

Borrow

Debit Card

Credit

Double Dare Debt

• Put the scenarios into two piles:

You want to go on holiday because you haven’t been away for three months, but

you haven’t got the money, so the only way to afford it is to put it in on a credit card and

worry about it when you get home.

You have a store card with a limit of £500 and you’re off to the party of the year. You see

some top clobber that is guaranteed to impress the hottie you have your eye on which costs

£250, well within the limit of your card so you go for it

You want to go to uni next year but you can’t afford to pay the tuition fees straight up.

Your parents have offered to help you with your living costs so you decide to get a

student loan to pay for the fees.

You’ve just started a new job but you can’t afford to move out of your parent’s house just yet, so you have to do the long commute by train every day. The cheapest way to do this is by buying a season

ticket to cover the year’s travel but you can’t afford it so you pay for it using a 0% credit card

0%

You’ve just moved house and got a new job. There’s no public transport, so you borrow

money for a car, though you can’t get a cheap interest rate. Yet without a car you

can’t work

Cheap interest

rate

The Student Money

Muddler

Tuition Loan

A loan from the government which covers university tuition fees for the duration of the course. The money goes straight to the university and you don’t pay it back until after university when you earn £21,000 or above. The loan is also offered to students at a low rate of interest making it one of the cheapest forms of borrowing.

Maintenance Loan(Living Cost Loan)

A loan from the government to cover your living costs whilst at university. These are only available for fulltime students and are paid straight into the student’s bank account at the start of each term.

The exact amount you receive depends on:•Your household income•Where you live•When you start your course•What year of study you are in•What help you get through Living Cost Grants

Maintenance Grant(Living Cost Grant)

Living cost grants are grants of up to £3,250 that are available to individuals whose parents have a low yearly income. Most important to note: You DON’T have to pay grants back!

Your team will create a guidance plan for your young person about whether they should go to university and how to get

through it with as little debt as possible. Your guidance should be clear and specific

to your young person.

OSCAR REWARDS3

ContentExplain which

study and funding option is

best for your student

Explain which study and funding option

is best for your student based on

their personal circumstance

Justify with evidence the best study and funding options,

show you have thought about other options and that these are specific to the individual

Style Clear Clear, persuasive Clear, persuasive, lifelike, memorable

Respect Show respectShow respect,

everyone contributes

Show respect, everyone contributes, divide up roles

Mission: Create1. Choose your character

2. READ your character’s case study and supporting information sheets

3. REFLECT use your own knowledge and logic to think about the best option for the character

4. RELAY send two members of your team to get advice from the Money Mentors

5. Write out your guidance plan6. Practice and time your advice session

Money Mentor Top Thinking Tips

• What is your character’s dream job?• What options do they have to get there?• Do they need to go to university?• If so, how can you support them so they do

not get into more debt than necessary?

Zak’s Credit & Debt

CONUNDRUM“What I really want to do is become a professional

rapper but the industry is hard to break into and can take years to make any money. I remember Tinchey Stryder coming to my school last year and saying its

always good to have a back up plan. Maybe uni would be a good back up but I am worried about the cost. I wonder if it would be possible to keep working in the

bike shop to make some money on the side?”

Tasha’s Credit & Debt

CONUNDRUM“I am just finishing my A Levels and have applied to

go to university because I want to be a doctor. I need to get at least 3 As to get in and if I don’t I will either retake my exams or take a gap year to work

out my options. It is a long course so I will end up in a lot of debt but I am sure it will all pay off when

I’m working. I wouldn’t mind getting out of London -maybe that would help me save some money on

living costs?”

Bilal’s Credit & Debt

CONUNDRUM“I have always loved computers and would love to

come up with the new cool idea like the iPad. I think it might be useful to study business at university to get

some extra knowledge and fresh ideas but I don’t know if I could afford to pay rent and bills living away from home. My mum has said I can stay at home if I need. But do I really need a degree to become a successful business man? I hear Bill Gates never even finished

university! What should I do?”

If you simply remember 2 things from this session:

•University is not for everyone but for those who want to go, higher fees should not deter you. There is a great deal of financial support available and you don’t have to start repaying it until you earn £21,000. Also, the debt is cancelled after 30 years if you haven’t paid it back.

•There is a difference between good and bad debt! Good debt is affordable and cheap, bad debt is unaffordable and expensive! But there are always grey areas. Student debt can be the cheapest and most useful debt you will ever be in but whilst at uni, watch out for credit cards, store cards and overdrafts that can put you in more debt.