Students in England receive their higher education free at the point of use — it is graduates who pay for it once they have a decent job. This is the only sensible way to regard the present system of student finance, yet it is a message that both the Government and universities have failed to get across to potential students.

The introduction of variable tuition fees for students starting their courses last September prompted concerns that many potential undergraduates would be put off university entirely.That student applications for this September are up suggests that these fears may have been exaggerated. But that is not to underestimate the fear that debt is still a big issue for undergraduates, who can now expect to leave university owing up to £30,000 for fees and living costs.

Most English universities charge tuition fees of £3,070 a year (the maximum allowed). Fees are paid upfront by the Government via the Student Loans Company and students repay them when they graduate and earn more than £15,000 a year. Because repayments are limited to 9 per cent of any earnings over the £15,000 threshold, they are best seen as a relatively modest monthly payroll deduction.

So far, so good. The downside is that repayment is spread over many years (13 is typical) and those with the maximum loans are likely to be paying them off until their mid-thirties.

Full-time undergraduates can borrow from £3,415 to £6,170 from the Student Loans Company for living costs, The amount borrowed depends on parental income, place of residence (in or away from the parental home) and whether you are studying in London.

Students whose family income is below £37,425 are entitled to a means-tested maintenance grant worth up to £2,765 (England and Wales) or £3,265 (Northern Ireland). But from September next year they will be more generous, when up to 250,000 more students should become eligible for non-repayable grants for university living costs.

They will qualify for a full grant if their parents earn less than £25,000 — up from the present level of £17,500. Those whose families earn up to £60,000 a year will also get some form of maintenance grant, up from the present maximum of £37,425. This will put an extra £1,100 a year in the pocket of a student from a household on £25,000 and an extra £1,000 for a student from a family on £40,000.

Graduates will also be able to take a five-year “repayment holiday” on their student loans, either in a single stretch or over short periods, perhaps to buy a house or start a family. The student support system varies throughout the UK. In Scotland, Scottish residents and EU students have their tuition fees paid by the Student Awards Agency for Scotland. Most Scottish graduates must, however, make a payment once they leave of £2,289, known as the graduate endowment.

Since the Scottish Nationalists won power in May, Fiona Hyslop, Scotland’s new Education Minister, has pledged to scrap the endowment fee for current and future students from next April.

Scottish students must pay the £3,000 top-up fees if they choose to study across the Border, while English and Welsh students studying in Scotland will still face tuition fees of £1,700 a year, or £2,700 for medical courses.

Students living in Wales attending a Welsh university from September will be eligible for a £1,800 fee grant, so will just have to pay tuition fees of £1,200.

The fee grant is available irrespective of family income. Those attending university outside Wales will still have to pay the full top-up fee of £3,000 at most universities.

English universities and colleges charging £3,000 for a course have to provide at least £300 a year in non-repayable financial support, to help students receiving the full maintenance grant to meet living costs. Some offer bursaries that do not have to be repaid — in the form of cash, scholarships, laptops, bike vouchers, travel and sports centre passes or art equipment.

Tips on dealing with student debt:

Kevin Mountford, head of current accounts at moneysupermarket.com, says:

- Make sure that you have a low interest rate on your overdraft if you expect to be in the red quite a lot.

- Look at overdraft tiering as providers offer varying limits through different years of study.

- If you get a debit card with the account, look at the charges, especially for use abroad.

- Look for a part-time job to help to finance your studies and keep you out of overdraft.

- If you are waiting for your student loan, an agreed overdraft can suffice for a short period while waiting for the loan to go into your account.

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