A rising number of UK students are reporting financial problems, and tens of thousands are relying on payday loans to cover their daily living costs, a new survey has found.
The number of students struggling to meet their daily living costs is up by 12% in just one year, to 600,000 students. The decision by so many to turn to payday loans has sparked concern, as campaigners say more and more students have to fill a financial gap despite borrowing more money than ever before.
The controversial short-term loans, were seen to be out of control, and at the start of this year the Financial Conduct Authority enforced new legislation to cap the interest the loans could charge. But many have continued to criticize the loans that can still have an annual interest rate, of up to 1,500%.
Going to university in the UK is more expensive than ever before. University education was free in the country until 1998 when the then Labour government introduced means tested tuition fees of up to £1,000. Things have changed dramatically since then, and today, a typical student on a three-year course will have an average £44,000 debt when leaving university.
Last year a study found that most students will still be paying back their university loans well into their 40’s and 50’s with many never being able to clear their debt.
Campaigners say that to see students have to turn to payday loans on top of this debt indicates something fundamentally flawed in the system.
Payday lenders have responded to the survey by saying students are "capable of making informed choices".
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