Unite Students, a student service, took a survey to put a number on the many students that have turned to payday lenders in times of need. It was reported that 26 400 undergraduate students and 5 400 postgraduate students basically relied on payday loans to get by. In total, they could be paying up to 1500% in interest rates.
When asked to comment the payday lenders replied that students who turn to payday lenders for cash are “capable of making informed choices.”
Jenny Shaw, head of student services for Unite Students, makes it clear that the concern is for students who are turning to payday lenders in desperation. These students are taking out loans that they can’t possibly pay back. There is a great gap between the grants and maintenance that students can apply for and the money that they are actually given. It is no small wonder that students turn to payday lenders. A payday short term loan is easy access to the funds that are sorely needed.
Why do students turn to payday lenders?
Unfortunately we cannot dump any of the blame on the shoulders of the payday industry this time. In fact it would not be surprising that the payday lenders give out loans to students with regret and pity, wishing they didn’t have to. What is the problem? What makes students turn to payday lenders? Ed Milliband does not seem to think that student loans and grants need any kind of reformation. So students and their families sit in a tight squeeze while they sweat out those university years.
In London students can borrow 7 751 pounds per year for rent, food, and any other expenses like travel or entertainment. On top of that another 9000 pounds need to be coughed up for tuition fees, because that is basically how much it costs to teach a student these days. Now it doesn’t matter how you look at it, it’s just not enough and so the assumption is that the bank of Mum and Dad will step in and pay the rest. What if Mum and Dad and down at the payday shop as well? According to recent study, to live and study with basic needs covered, another 5000 pounds will need to be found. For those who make a medium sized income as well as those who make practically nothing at all, it is impossible to support the student in the family. So students turn to payday lenders.
Who is getting the blame for students taking out payday loans?
As usual the payday lenders are taking the wrap. Audrey Jordan, a student in London got herself into 6000 pound worth of debt with payday lenders. Here is what she says:
“I would say to students thinking about using a payday loan provider – take my advice: do anything to avoid it.”
At the same time the National Union of Students is speaking out against that the loans and grants are insufficient.
A spokesman from the Consumer Finance Association (CFA) stated that responsible payday lenders would not give a loan out to a student if they did not have a job or any other form of disposable income.