Short-term loan fears for struggling students

MORE than 6,000 Scots students are using controversial payday loans, almost double the UK average, a new survey has revealed.

Across the UK almost 32,000 students are using the short-term loans to make ends meet, risking APR rates of up to 1,500 per cent.

The results are revealed in the Unite Students Insight Report: Finance, based on a poll conducted by the National Union of Students of 8,500 UK students and applicants.

Meanwhile, more than 10,000 of those planning to start university in September say they plan to use payday loans.

The report also shows about 633,500 undergraduate students feel they do not have enough money to cover their living costs, up by 12 per cent in one year.

About 563,000 undergraduates say they have taken on more debt than they expected, up by seven per cent in a year

But 968,000 say they do have enough to support themselves.

Jenny Shaw, head of higher education engagement and student services with housing provider Unite, which backs the report, said: “It is hard to imagine how taking out a payday loan is the right choice for any student looking to get their finances back on track.

“If a student is struggling financially there are a wide range of options and support services available. Universities and some students’ unions have student finance advisers who offer an excellent service.

“It’s worrying to see a greater proportion of applicants believe payday lenders are the way forward. We can only hope that expectation doesn’t turn into a reality.”

The report also found that some 18 per cent of students live at home with their parents or guardians.

For these students, affordability was the main consideration for about 75 per cent of cases. However, other factors were also important, including proximity to chosen place of study, fit with existing commitments and convenience.

It also found 52 per cent of applicants give their main motivation for going to university as having an interest in their subject, but once at university, the figure drops to 47 per cent as they appear more motivated by getting a better job and improving the standard of their education.