Tweet
University bans payday loan companies
Payday loan companies have been banned from a university campus as there are fears students are turning to prostitution to pay off their debts.
The students are forced to borrow money until they get their loans, but then find they have to resort to desperate measures to pay it back Photo: Alamy
By Hayley Dixon
6:04PM GMT 27 Feb 2013
25 Comments
The loans, sometimes taken by student-parents to feed their children, lead to “desperate measures” as people get caught in a vicious cycle of debt, it is said.
As a result companies which offer short term, unsecured loans at high interest rates have been banned from advertising anywhere on the University of East London campus, including in magazines, on posters, or online.
UEL made the move as more students were turning to the firms to tide themselves over between grants and loans.
The University’s chaplain, Rev Jude Drummond, said that at particular times of year people came to her in “very distressed and emotional states” and some were abandoning their studies because of financial difficulties.
“It leads to desperate measures. In this area we’ve got a lot of crime and social problems. There are a lot of people on the streets who are there because of money worries. There’s evidence of people having to turn to sex work because they can’t make ends meet,” she told the Evening Standard.
Related Articles
The University said that the problems existed across the country.
Gareth Smith, director of student life at UEL, said: “Payday loans are not appropriate for students; they do not have the regular income to support them.
“We have seen the effect that they have, and we would urge other Universities to do the same as us.”
Payday loan companies, such as QuickQuid, Wonga and Payday UK, have drawn heavy criticism for charging annual interest rates of up to 4,000 per cent a year.
UEL, which claims to be the first University to introduce the restrictions, is considering blocking access to payday loan websites as it advises students to seek alternatives including debt counselling or credit unions.
The University has 2,000 students with dependant children, who it says are commonly targeted by the firms.
Some are forced to borrow to put food on the table, and the small loan soon escalates, said Nicole Redman, head of UEL’s Student Money Advice & Rights Team.
“The long-term repercussions can be very serious, with students finding themselves in a vicious circle of insurmountable debt,” she added.
The trade body representing the short term loan industry, the Consumer Finance Association, say the service should not be used to try and fix long-term debt problems and may not be suitable for students.
Peter Mercer, NUS Vice President, described the firms as “unscrupulous lenders targeting vulnerable students”.
Payday loan companies have been banned from a university campus as there are fears students are turning to prostitution to pay off their debts.
The students are forced to borrow money until they get their loans, but then find they have to resort to desperate measures to pay it back Photo: AlamyBy Hayley Dixon
6:04PM GMT 27 Feb 2013
25 Comments The loans, sometimes taken by student-parents to feed their children, lead to “desperate measures” as people get caught in a vicious cycle of debt, it is said.
As a result companies which offer short term, unsecured loans at high interest rates have been banned from advertising anywhere on the University of East London campus, including in magazines, on posters, or online.
UEL made the move as more students were turning to the firms to tide themselves over between grants and loans.
The University’s chaplain, Rev Jude Drummond, said that at particular times of year people came to her in “very distressed and emotional states” and some were abandoning their studies because of financial difficulties.
“It leads to desperate measures. In this area we’ve got a lot of crime and social problems. There are a lot of people on the streets who are there because of money worries. There’s evidence of people having to turn to sex work because they can’t make ends meet,” she told the Evening Standard.
Related Articles
- Borrowers have 'up to 80 payday loans'
27 Feb 2013 - Time to change the way student loans are paid
22 Feb 2013 - OFT urged to suspend four payday lenders
15 Feb 2013
The University said that the problems existed across the country.
Gareth Smith, director of student life at UEL, said: “Payday loans are not appropriate for students; they do not have the regular income to support them.
“We have seen the effect that they have, and we would urge other Universities to do the same as us.”
Payday loan companies, such as QuickQuid, Wonga and Payday UK, have drawn heavy criticism for charging annual interest rates of up to 4,000 per cent a year.
UEL, which claims to be the first University to introduce the restrictions, is considering blocking access to payday loan websites as it advises students to seek alternatives including debt counselling or credit unions.
The University has 2,000 students with dependant children, who it says are commonly targeted by the firms.
Some are forced to borrow to put food on the table, and the small loan soon escalates, said Nicole Redman, head of UEL’s Student Money Advice & Rights Team.
“The long-term repercussions can be very serious, with students finding themselves in a vicious circle of insurmountable debt,” she added.
The trade body representing the short term loan industry, the Consumer Finance Association, say the service should not be used to try and fix long-term debt problems and may not be suitable for students.
Peter Mercer, NUS Vice President, described the firms as “unscrupulous lenders targeting vulnerable students”.
Comment