Students taking out a loan this summer need to “understand the system”

As banks prepare to pour onto campuses with freebies ranging from iPods to five-year railcards, Frances Walker, of the Consumer Credit Counselling Service (CCCS), warned students not to be tempted by gifts over better saving deals.

“Students should shop around to get the best deal that they can. They need to be clear about the terms and conditions and know when they have to start repaying,” said Ms Walker.

“Students need to learn how to use the system.”

Banks target students with gifts as it means that they get to handle the loans that students are offered by the state to survive at university.

As this is not often enough, many turn to overdrafts on accounts to help them get by.

However, only one bank, Barclays, is offering interest free overdrafts instead of gifts and Mr Walker urged prospective students to give full consideration as to the true value of “freebies”.