The number of UK students taking out payday loans in order to make ends meet is much higher than previously thought, according to new research.
Student financing organisation, Future Finance, spoke to 1,000 students – evenly split between undergraduates and postgraduates – to find almost 27 per cent owed money to a payday lender.
This figure is up from 3 per cent in a similar survey conducted just weeks ago by Save the Student.
From this 27 per cent, ten per cent said they owed between £501 and £1,000. A staggering 92 per cent said they are incurring charges due to late payments and another 54 per cent admitted to always incurring such charges.
The CEO of Future Finance, Brian Norton, said the growing funding gap that exists between the costs of higher education and available financing sources is leading many students to make bad financial decisions.
Issuing a warning to students who use payday lenders, he said: “Resorting to very high interest, short-term lending does not solve the problem.
“In fact, it can actually make things much worse if you are unable to pay the balance back on time.”
Speaking of the role Future Finance has been playing in a time when student funding has been under intense scrutiny, Mr Norton explained the company was established to give UK students a tailored and long-term finance option to help bridge this funding gap.
He said: “We believe our loans – with student friendly features such as low repayments until after university, payment holidays to help with rough patches and much longer loan durations – offer students a compelling and sustainable alternative to other more expensive sources of finance such as some bank loans, credit cards and payday lenders.”
Future Finance said it has received over 17,000 applications from students at every single university from across the UK since 2014.
The organisation has loaned £8.5m, in total, to date and is now lending just over £1m-a-month.
With the average loan for an undergrad at £7,469 and £10,030 for a postgrad student, Future Finance said it carefully approved 1,179 applications last month – 53 per cent of applications received.