Education & Family

'Worrying' number of undergraduates use payday loans

Student turns out pockets Image copyright Thinkstock
Image caption A quarter of the undergraduates surveyed said they had taken on more debt than they expected

Up to 46,000 undergraduates may have borrowed from payday lenders last year, suggests a survey.

Some 2% of students said payday loans or doorstep cash was one of the ways they paid for their time at university.

More than 1,700 undergraduates were surveyed by the National Union of Students and the university accommodation company, Unite Students.

"They sadly feel they have no other option than to take out one of these loans", said Colum McGuire of the NUS.

The researchers say that if the findings were replicated across the entire UK student population, it would mean 46,000 had used or were considering payday loans.

'Living crisis'

They describe the figures as "worrying".

"Anticipating the need to turn to high interest debt solutions suggests that, for a small proportion of respondents, all other avenues of funding will either not be approached or do not cover students' financial requirements," says the report

"Our research has proven this to be a live and growing issue for students," said Mr McGuire, NUS vice-president for welfare.

He said use of these loans was a sign of the student cost-of-living crisis.

"Debts from high interest loan companies can potentially ruin people's lives.

"No student should ever feel that they have to turn to payday lenders, and we would recommend that any student worried about their finances get in touch with their students' union for advice."

The researchers asked students: "Which, if any, of the following do you use or will you use to finance your time at university?"

The list included conventional tuition fee and maintenance loans, savings, loans from family and friends, maintenance grants, bursaries, scholarships overdrafts and credit cards.

Some 71% of male students and 59% of females said they were confident they could manage their household bills.

Overall a quarter of undergraduates said they had taken on more debt than expected.

Financial education

In his introduction to the report, Unite's operations director, Richard Smith, writes: "The uncertainties raised around finances suggest the possibility of a greater need to provide more education to students regarding their financial arrangements."

He said the company had introduced a budget calculator on its website and had changed its rent due dates to align with student maintenance loan payments.

Last year the NUS backed a campaign to ban payday lenders advertising on campuses.

At the time, the Consumer Finance Association, which represents some of the main payday firms, said students would need to be in regular employment to qualify for a loan from a reputable lender.

It warned that a ban would not stop rogue operators.

The survey participants included undergraduates in all year groups, from both the old and new tuition fee systems and reflected the demographics of students in higher education in the UK, say the researchers.

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