September marks the start of the university term for many UK students. A number of them will return from a full summer of working hard in order to come back to university with as much personal savings as possible as a financial cushion to help them throughout the year. The majority of UK students will rely on student loans and funding in order to help them through their academic years. Student loans are used for a number of things, from paying university course fees, rent and accommodation and evenly weekly food bills.
However with the steep increase in university fees and accommodation costs, many students are having to dip into their own personal savings accounts in order to cover costs that would previously have been covered by their student loans. Not only are students having to use their own personal savings but are also turning to alternative methods of finance such as payday loans.
It’s estimated that 1 in 3 students have applied for a payday loan for reasons such as accommodation costs, weekly food bills and more alarmingly for the occasional night out. With more students struggling to combine a working life with their studies and due to the increase in competition for each job whilst at university, more and more students are opting for short term finance providers in a bid to help them cover monthly costs.
Students based in London City are more likely to apply for additional finances as a result of higher university fees and a higher cost of living. Manchester was a close second with Loughborough coming in third place.
Payday loans have been a very popular conception with Students based on the very quick process and short borrowing terms available with them. Unlike personal loans provided by many larger banks and building societies, students do not have to go through a lengthy application process so will therefore borrow as and when they need to.
Early in 2014 the government introduced the new university fee structure which permitted UK based universities to charge a maximum yearly fee of £9000. More than 50% of universities do currently charge the maximum threshold however with the new repayment structure in place, this enables graduates to only start paying back the debt when they earn over £25,000 annually. However with university fees alone costing up to £9,000 students will have to borrow considerably more than that in order to help cover accommodation and weekly living costs.
There is no doubting that payday loans are very popular with students, with people aged 18-25 more likely to take out a payday loan than any other age range. Approximately 30% of the 18-25 age category are currently students throughout the UK. The debate of whether university fees are too high has divided the government with many people sharing different opinions on what the realistic price should be to study at a UK university. Many have argued that with the increase in fees and living costs, this will prevent and put off many UK students from progressing on to university and following their desired career path.