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UK News

Payday loans: Churches can prepare students for uni life

It comes after new research has revealed more students are taking out payday loans to fund their lifestyles.

The study by Moneysupermarket found a 136 per cent rise in the number of students taking out the costly, short-term loans.

According to the survey, one-in-four current students borrowed from a payday lender compared to 11 per cent 10 years ago.

The loans are being used for social activities like clubbing and holidays as well as gym memberships and healthy food.

Christian financial planner Ron Mbakwe told Premier the loans' high interest rates can have long term implications for students.

"They could end up paying back significantly more than they borrowed. And in a worst case scenario, if they default on payments, this could leave a black mark on their credit file making it much more difficult to obtain credit in the future.

"They need to consider what they really need to spend this money and to think carefully about the consequences of getting into debt at such an early stage of their life."

Ron said that peer pressure can lead many students "living outside of their means" and suggested budgeting, avoiding impulse purchases and opting for low cost activities such as university provided interest groups to stay out of debt.

He went on to say that the Christian community has a role to play in preparing soon-to-be students to be 'good stewards' of their money.

"The Church could take a more proactive approach especially for the young people before they get to uni, to help them prepare for life once they move away."

 Listen to Premier's Heather Preston speaking with Ron Mbakwe here: 

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