A new report by student accommodation provider Student Unite has revealed that around 6,300 university students in Scotland are relying on payday loans to make ends meet. The figure accounts for almost 3% of all students attending universities north of the border.
In the UK as a whole, around 32,000 students are estimated to be using payday loans. However, the Scottish student population only accounts for around 10% of all UK students. So the Student Unite survey shows that 18.75% of all UK students who are using payday loans are attending Scottish universities.
In other words, Scottish students are almost twice as likely as their English or Welsh counterparts to turn to payday loans to help cover their costs. But where has this Scottish student debt crisis come from? After all, Scottish-domiciled students aren’t saddled with tuition fees of up to £9,000 a year, so you might expect them to have an easier time of it than people studying in England or Wales.
According to Scottish Labour, the answer lies in the large cuts that the SNP government has made to student grants and bursaries – slashing available funds by a massive £40 million. As a result, student debt levels have increased sharply, with many students feeling they have no choice but to turn to payday lenders to make up the shortfall.
Andy Gorton, Managing Director of debt counselling service, Trust-Deeds.co.uk, comments: ‘It’s very sad to see so many students struggling with poverty in Scotland. These are young kids who are just starting out in life and who should be looking ahead to a bright future, not worrying about how to pay the rent or afford the books they need for their course.’
As youngsters in their teens and early twenties, students are unlikely to have much if any credit history. They’re also unlikely to be earning much, even if they work part-time. So whilst they can usually access student banking packages – which often include interest free overdrafts – they’re effectively precluded from other forms of affordable credit such as personal loans. This leaves them with very few options when the money runs out.
‘As Unite Student points out, there are university and student union-based services that can provide help and advice on financial matters and, in some cases, Hardship Funds,’ adds Andy. ‘But given the current situation, these services are likely to be under extreme pressure – with the unfortunate result that many students are now taking matters into their own hands and resorting to short-term, high interest loans.’
Of course, taking out the odd payday loan here and there can be a useful solution to a short-term cash flow problem. But the glaring clue to their unsuitability for students lies in the name: payday loans. This is a form of credit that’s designed for working people with a regular wage or salary packet that they can use to pay off the loan within a short time. It’s not the right answer for a student with little or no regular income who needs extra cash, fast – but then has no means of repaying the loan.
‘It’s all too easy to get in a financial mess with payday loans,’ says Andy. ‘Even with the recent crackdowns by the FCA, there are still providers who aren’t too scrupulous about who they lend to, or how they collect debt. To any student who’s got themselves into a bad situation with payday loans or any other type of credit, I would say “Speak to a professional debt adviser as soon as possible”.’
Trust-Deeds.co.uk can help
Trust-Deeds.co.uk is here to help you find the best way to overcome your debts so that in time, you can leave your problems behind and enjoy a life without debt. Our friendly, trained advisers can arrange access to a range of high quality debt solutions, including:
- Protected Trust Deeds. With a Trust Deed, you make affordable repayments to your creditors each month, usually for four years. After that, any remaining unsecured debts are written off.
- Debt Management. This is a less formal solution that reduces the amount you pay to each of your creditors. We negotiate the deal and distribute your monthly payments on your behalf.
- Sequestration. The Scottish form of bankruptcy, sequestration gives you the chance to make a fresh financial start – usually after just 12 months. There are pros as well as cons but it could be an option if you’re short on income and assets.
Contact us today
Get in touch with Trust-Deeds.co.uk today so we can talk you through your debt management options and empower you to make informed decisions. Call us on 0141 301 1170 or complete our online form to receive confidential, impartial advice.