1 in 4 Students Using Payday Loans
September 16, 2019
As many as a quarter of students across the country use payday loans as part of how they manage their money, according to new research.
The worrying figures show that over the course of the past decade there has been a 136 per cent increase in the number of students using payday loans while they’re at university.
Back in 2009, only around 11 per cent of students used these short-term but very high interest loans, whereas now the figure is up as high as 26 per cent.
Over the course of the same timeframe, more and more students have also come to use credit cards, with 36 per cent now accumulating credit card debts, compared to 26 per cent a decade ago.
Meanwhile, the use of personal loans has also increased very significantly since 2009, with 23 per cent of today’s students relying on them to some extent to get by.
The figures have been put together by the price comparison service MoneySuperMarket, which also found that 31 per cent of contemporary students spend their maintenance loans within five weeks of receiving them, despite that money generally being intended to last for a full 16-week university term.
The advice from MoneySuperMarket’s experts is always to avoid using payday loans if at all possible and to find student bank accounts that offer interest fee overdraft options to young people.
“A third of students today aren’t able to make their maintenance loan last longer than five weeks, so it’s not too surprising to see that borrowing has increased,” said Emma Craig, a spokesperson at MoneySuperMarket.
“However, payday loans are rarely the most cost efficient way to borrow and should be a last resort,” she said.
“If you’re a student heading off to university this month, now is definitely a good time to think about how you’re going to manage your finances.”
A survey carried out by an organisation called Save the Student recently revealed that large numbers of students across the UK find that their money worries have a detrimental impact on their mental health.
In fact, 79 per cent of students said that they worry about making ends meet and a majority feel that the associated stresses are bad for their wellbeing.