Students across the UK are being forced to source external means of funding as the money received from Student Finance fails to sufficiently cover their expenses.
Students in Cardiff have been left with no choice but to take out pay-day loans to afford accommodation in the city centre. From 2017-18, 1,700 new student rooms are expected to open in some of the most expensive areas in the city centre- including the tallest building in Wales. Some of the accommodation on offer costs as much as £177.50 per week, equating to £9,000 per year. Although house shares in Cardiff can cost as little as £50 per week, many are laced with problems such as mould and rats making the accommodation uninhabitable.
With most loan companies charging about 40% APR on their payday loans students are being lumbered with even more debt at an already financially delicate time. Furthermore, with interest on student loans rising to 6.1%, graduated students will be entering the workforce at a distinct monetary disadvantage.
Similar cases of financial hardship have also been reported in Manchester where one student was rejected altogether from Student Finance, having to resort to crowdfunding for her degree. Agnes, who applied to study Physics at the University of Manchester, had her application for student finance rejected as she was not considered to be a ‘permanent resident’ of the UK, despite having lived in the country since she was four. After having her story included in a Dispatches documentary Agnes managed to raise £14,000 and has now started her first year of study. However, Agnes was part of a lucky few who can source money to cover tuition and living costs externally. In this case, the university are yet to comment on their lack of support for Agnes’ case.
It is not just loans that young people are resorting to, however, as students are recurrently relying on overdrafts to see them through the month. Populus Data Solutions conducted a survey of over 4,000 young people aged 18-30 and the results were highly conclusive. The survey found that 48% of young people are having to borrow money to make their cash last to the end of the month, whilst 24% are in debt all of the time.
We spoke to current students to see if they feel like student finance are providing sufficient sums of money to survive on. Maddie, a third year Religion student said, “My student loan doesn’t even cover my rent let alone my bills on top! I’ve been fully reliant on an overdraft all through uni. I have to ask for money from my parents but am applying for jobs all the time”.
Ellie, a second year History student concurred with this view adding, “My student loan only just covers rent! I have to work 20/24 hours a week to earn enough to cover bills and expenses, never mind anything extra like textbooks, emergencies or accidents. I can’t rely on my parents so am forced to work or use my overdraft.”
Hannah, a third year Politics student also explained the necessity of an overdraft as a student, “My overdraft is my best mate. The loan comes and goes in one fleeting meeting but my overdraft is always there to help.”
With tuition fees already rising to £9,250 (alongside inflation) and maintenance grants being converted into repayable loans, the financial future for student across the UK remains uncertain.