Students turn to payday loans and credit cards to fund university
Research commissioned by the lender Future Finance showed almost one-third of students (31%) have turned to credit cards, overdrafts and payday loans to cover university living costs, with nearly a quarter of these students not seeing these as forms of debt.
One of the reasons why students may be taking on these riskier forms of lending is because a majority (70%) said they don’t think their government loan is enough to cover all their expenses at university.
However with 40% of students not knowing what APR stands for, the survey suggests there is a stark knowledge gap when it comes to financial understanding. As a result it said parents need to play a bigger role in raising financial awareness to ensure children are prepared for an independent lifestyle.
Brian Norton, CEO and founder of
, said: “These products (credit cards, payday loans and overdrafts) are typically not tailored to students or to the lifecycle of higher education and we would encourage students to research all financial options available to them before choosing which form of credit they need to help them through university life.”
He added: “Schools, universities and parents alike have a duty to support students and help nurture their financial awareness.”