University students are the latest immediate short term loan clients

Short term loans are becoming popular with students

If you are a lender of short term loans, a payday lender, you might know that you are banned from advertising on university campuses. This comes as no surprise when the National Union of Students has found some of their latest surveys to yield disturbing information on the condition of students’ finances.

Students are finding it more and more difficult to fund their most basic needs and are turning to immediate short term loans. Much like pensioners, working class citizens and the unemployed, benefits and grants are just not stretching far enough. According to the NUS, there is an average discrepancy of approximately 8000 pounds that students have to find elsewhere to subsidize what they can claim in grants and student loans. One of the big problems that students face is that while rent, groceries, heat, and other necessary bills rise with inflation, these same student loans and grants stay the same. The NUS reports that they are scheduled to increase by mere 1%. Moreover those students who come from under privileged households and are eligible to claim maximum support are also feeling the pinch as this grant has remained at the same amount, 25000 pounds for the past 6 years.

More and more, students are having to resort to working full-time while they study, and as the NUS surveys and other researches are finding, these young people are turning to high interest, short term loans such as payday loans, credit cards, and overdrafts in sheer desperation. It is estimated that some 46,000 students across Britain have at some point taken out a payday loan, or say that they would seriously consider doing so. In conclusion the study shows that approximately one fourth of the student population is in more debt than they can handle.

The NUS report says that “Anticipating the need to turn to high interest debt solutions suggests that, for a small portion of respondents, all other avenues of funding will either not be approached or do not cover students’ financial requirements.”

NUS vice-president for welfare explains that, “Our research has proven this to be a live and growing issue for students.”

The Consumer Finance Association which regulates the payday industry assures that only students with full time or permanent jobs are granted loans. They went on to say that this would not stop the unregulated lenders.

So as payday lenders adverts are being burned on campus by the NUS, nothing is stopping the students from going down to the high street to take out a quick loan. And the crux of the matter begs the question: why are the students in this mess in the first place? This would be the same question that we ask about the pensioners, the unemployed and low income households, who are forced to take out quick loans to pay, not for frivolous items, but for serious stuff like heat, food, and shelter.