Students go into debt to pay their rent
According to a student housing survey, more than a third take on more debt from commercial lenders to pay rent.
When we take into account students who have borrowed from friends, families and employers, the proportion who are struggling to pay their owners rises to 60%.
A student, who wished to remain anonymous, admitted she had almost £ 3,000 on her overdraft plus £ 800 on a credit card which had an interest rate of around 30%.
All this money had been borrowed to pay the rent for shared accommodation. She also took a high cost loan of £ 200 in her second year, put £ 400 on a credit card in her third year and also took a second overdraft.
Chased by debt collectors
Another student, Lucy, who is a third year student at UWE Bristol, explained how she juggled four overdrafts in order to pay the rent.
In his residences the rent was £ 8,000 a year and his student loan was £ 8,500. In total, she borrowed £ 4,000 from her overdrafts and revealed that she paid fees and charges on three of them.
Lucy added: ‘I’m careful with my spending and don’t lead a lavish lifestyle but often have to eat £ 10 a week or prioritize rent over other bills. It even led to me being sued by debt collectors.
Jake Butler, money expert for Save the Student, who conducted the survey, said his findings highlighted the “urgent” problem with student funding.
“This finding that so many students risk getting into serious debt just to pay for student accommodation is worrying,” he said.
“It is unfair that students are forced to borrow to keep a roof over their heads, and without being aware of the impact debt can have on their well-being and future finances.
He added: “The maintenance loan is not enough to live on and obviously most of it goes to homeowners. The system is a long overdue government reform.
Consequences of credit
Although the majority of students (37%) turned to parents for help covering rent, a bank overdraft or loan was the second most common way to turn for a boost. financial.
Save the Student said many students had families who couldn’t afford to help financially. Or, in other cases, their parents’ income has reduced the maintenance loan amount.
For these people, loans and credit cards can be very expensive as they come with uncapped interest rates and serious consequences for late payments, such as fees or damage to the credit score.
Sue Anderson, Media Manager at StepChange Debt Charity, said: “These forms of credit may sound attractive because they often don’t require repayment until you graduate.
“However, many students face a cliff at the end of college when repayments begin and they are likely to be financially vulnerable.
“We encourage those who lend to students to consider these pitfalls and make sure their products don’t end up causing financial hardship. For any student struggling with debt, you can find help managing your finances on our website.