Student debt has seen a record increase, according to Future Finance, a student financing organisation. After speaking to 1,000 students (500 undergraduates and 500 postgraduates), the organisation found that nearly 27 per cent of those students have racked up debt with a payday lender.
Surprisingly, when compared to a similar survey conducted - just weeks ago - by Save the Student, a student financial advice website - this figure has already gone up by 3 per cent.
Incurring late payment chargesFrom the 27 per cent of indebted students, ten per cent owe between £501 and £1,000. An alarming 92 per cent have incurred late payment charges while 54 per cent revealed that they always incur late payment charges.
Does not solve the problemBrian Norton, CEO of Future Finance, believes that the increase in higher education course fees and the limited financing resources available have caused students to make bad financial decisions. 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." (www.independent.co.uk, 15 July 2015)
With the average loan at £7,469 and £10,030 for an undergraduate and a postgraduate, respectively, Future Finance has proudly announced that it has approved 1,179 loan applications (over 53 per cent) last month. Although the organisation has loaned £8.5m since 2014, it is now lending just over £1m every month. This is only set to increase even more as the budget gets tighter and the student grants transition to student loans.
Image by Simon Cunningham, Flickr (Photo credit: Lendingmemo.com)