More than half of students treat their loan like a windfall and blow it on luxuries such as booze, gadgets – and even holidays, a study has revealed.
Researchers found that, rather than studiously investing in books, bills and stationery, three in five will immediately rush to the shops and treat themselves.
One in 20 even admit to letting the entire amount slip through their fingers within just days of it landing in their bank account.
Less than one in five said they put at least some money aside in an attempt to get through the whole term.
And two thirds worry their lack of savings means they will have the same financial struggles during their working lives as they did whilst at university.
Tim Orton, Director at Aviva UK Life, which commissioned the research, said: ”For many students having a large sum of money paid into your bank account at the start of each term is a huge temptation, especially for those who are in their first year.
‘University is the first time they experience independence in every way. They suddenly find their account is flush with money, with no-one to answer to about how they spend it.
”This money isn’t from a never-ending pot and it’s important for those just starting out at university to budget and put some funds aside, so that the money lasts them.
”Not only will it help them graduate with as little debt as possible, but if they learn the savings habit early, students will hopefully continue to save throughout their working lives until they need to consider how to make their savings last through their retirement.”
The study of 1,800 students and graduates found that 51 per cent treat their loan like a personal ‘windfall’.
Three in five starts spending their loan as soon as the money appears in their bank account.
And within a week of receiving it, the average student has already spent around a third.
But rather than essentials like books and living expenses, 46 per cent admit they blow all or most of their loan on luxuries they don’t really need, or which aren’t at all related to their studies.
While a sensible 44 per cent put the cash towards their day-to-day living expenses, just a third make books for their course a priority.
Instead, 42 per cent use the money to buy alcohol or new clothes, while another 39 per cent put it towards nights out.
One in five splash out on new make-up and 18 per cent enjoy regular meals in restaurants.
Fifteen per cent even admit to using their loan to book a holiday, with another one in ten treating themselves to city breaks or weekends away.
Others spend their student loan on games consoles, entertainment and kitchen gadgets, paying off other loans and even paying for a wedding.
One in 20 admitted they put the cash towards a new car or motorbike.
But 61 per cent say there are times when they run out of their loan money before their next instalment is due, with more than one in ten saying this happens all the time.
To get them through to their next instalment, 44 per cent turn to the bank of mum and dad, while another 41 per cent use their bank overdraft or credit card.
Only 30 per cent cut back on spending and one in five got a job to tide them over.
Looking back, four in ten graduates say they regret spending their student loan the way they did, with 58 per cent saying they could have spent it more wisely.
Over half wish they had made more of an effort to save for university, or had a part-time job, so they didn’t have to rely on their student loan so much.
Nearly two thirds of graduates think dealing with their student loan, and the resulting debt, has made them better at handling their money now.
Three quarters are making more effort to put money aside for their future because of their university experience.
Tim Orton at Aviva added: “It’s important that students enjoy their undergraduate years but they’re never too young to get into the habit of budgeting.
”Separating their needs from wants, and setting some simple financial goals for the short, medium and long term will instil some self-control over spending, and form habits that willdeliver considerable benefits in later life.”
Top 25 things bought with a student loan:
1. Day-to-day living expenses
3. New clothes
4. Books for my course
5. Nights out with friends
8. Restaurant meals
11. Music or films
14. Partied all the time
15. Weekend/city breaks
16. Games console
17. Paid for trips around the country to visit friends at other unis
18. Deposit on a house/flat
19. Kitchen gadgets
20. New car/motorbike
21. Entertainment gadgets
22. Paid off other loans
23. New TV
24. Spa/beauty treatments
25. A wedding