THE Government's plan to make part-time higher education available free to those on low incomes or benefit will come as a welcome relief to students who might otherwise have found themselves drowning in debt.

The Scottish Office plan will enable universities to offer free places to part-time students from low-income backgrounds.

For regular students who will in future have to pay up to #1000 a year in tuition fees for full-time courses, the management of their debts will become ever more critical from this year.

According to research carried out at Edinburgh University before the end of the last academic year, 37% of students about to graduate had no debt - with women slightly more likely than men to be debt-free.

Just over a quarter of the respondents had debts of up to #1000; around a fifth owed between #1000 and #2000, and one in 10 owed from #2000 to #3000. More serious debt was limited to a small percentage, though one individual had clocked up a debt of #18,000, while another had somehow run up a horrendous #31,000.

The survey was carried out by Lauren Liston as part of her dissertation at the end of a four-year business studies course.

Liston, 22, graduated last summer and two months ago took a job as an account controller at the WM Company in Edinburgh. She says of the need to find employment quickly: ''The final year is really tough, everyone is really pressurised into finding a job simply because they have a student loan to pay off.''

Of Liston's sample, 64% had debts from a Student Loan Company advance and 68% had bank overdrafts to pay off.

Over the period 1994-96, the average bank debt at time of graduation (among those who had any bank debt) went up from #822 to #1128, while the average Student Loan debt shot up from #1075 to #1806. There was also a rise in ''other'' forms of debt from #923 to #1095.

The geographic split of debt showed that students from the West of Scotland had an average #1405 of bank debt in 1996, a massive rise from the average #673 and #574 reported for the previous two years, and a doubling of the average total debt from #1187 to #2254.

Liston says: ''It is becoming increasingly difficult to find jobs. More people are trying to travel after they finish.''

She spent six months travelling, helped by a student loan, bank card and parents. ''When I came back it was a case of I had to find a job right away.''

Student loan repayments can be deferred for a year after graduation or until the former student's salary reaches #16,500.

Overdrafts too usually have six months or a year's interest-free grace attached to them. But Liston is busy paying off her overdraft, which has a #600 limit. She is considering taking out a mortgage later on this year and perhaps buying a car.

She says: ''I feel slightly better off than when I was a student

and I am facing up to the responsibility. After four years suddenly you realise that you have to pay everything back and it is quite difficult.''

Although her research was effectively funded by Halifax,

Liston's findings on customer

satisfaction proved happy reading for Bank of Scotland, which received the highest ratings across her student sample.

Both Bank of Scotland and TSB offer an interest-free overdraft in the first year of #500, rising to #600 in the second and #700 for following years.

Royal Bank of Scotland allows #600 in the first year and #800 in following years, rising to #1200 in the final year.

Clydesdale offers only a #100 overdraft, but has a current account paying 6.5% on balances above #1. It also offers to repay debt interest on loans from the Student Loan Company once the student has graduated.

Debt on graduating

#1-#500 12%

#501-#1000 14%

#1001-#2000 19%

#2001-#3000 10%

#3001-#4000 3%

#4001-#5000 3%

#5001+ 3%

None 37%