Spotlight on: students and their money

A recent NOP finance report identified students as 'green shoots' - newly sprouted consumers with lots of potential. Although their financial holdings are low, their youth makes them the perfect target for those selling first-ever current accounts, credit cards and other financial products.

The abolition of grants in the late Nineties opened the floodgates for the finance sector. There is now an insatiable demand for borrowing, and it is a rare student that does not need to call on the help of overdrafts and credit cards to get them through university.

The modern student lifestyle has accelerated the need for credit. Today's student has a 'live today, pay tomorrow' attitude and expects to live a full life at university. As The Guardian recently said of students: "They are now uniquely flashy, conditioned to expect a lifestyle of cocktails, designer clothes and en-suite travel."

So isn't this a bit of a worry? Not according to students, says Dr Sue Eccles of Lancaster University. She conducted research into the borrowing phenomenon and found: "The general consensus amongst university students was that they have accepted that they will have extensive debt as an inevitable part of their experiences. They do not treat loans or overdrafts as 'real' debt but merely as a long-term investment." They may now have money, but students are still out for all they can get for free. Incentives such as gifts, discounts and prize draws are guaranteed to capture their interest in finance products. When it comes to signing up for a credit card, it is often the originality of the giveaway that makes the difference. Barclaycard found last year that its free popcorn-maker was massively successful in attracting new customers. One Aston University student told a newspaper reporter at freshers' fair: "The funny thing was I was not interested [in getting a credit card], but at the same time felt tempted."

The plain facts of student finance are that, to get through three years of university, the average student needs in excess of £15,000. Even though 83% of students nowadays are from ABC1 backgrounds, £5,000 per year is beyond the budget of many middle-class parents and just as many are not inclined to provide that level of support. The typical student leaves university with over £10,000 owed, and prepared to work hard to manage their finances.

The student lending market is the strongest of them all. And with the prospect of 'top-up' tuition fees just around the corner - meaning students will pay up to £7,000 extra to get into a top university - it can only get stronger.