Millions of Students will Spend their Loan Within Months
Millions of students are spending their loans within months – on nights out, clothes, parties, holidays and cars, according to new research.
Over a quarter have spent their student loan within a few months and one in ten has gone through it within a month.
And almost two-thirds (65 per cent) haven’t considered how they are going to pay off their student debt.
The survey, conducted by Nationwide FlexStudent, surveyed more than 1,500 students and parents.
It revealed that 68 per cent of the parents of students are having to subsidise their children’s further education, as a third of students would rather ask their parents for money than work more hours.
Over a third have to plunder their life savings, while 29 per cent cut back on holidays, a quarter reduce their socialising, and 22 per cent curtail spending on either a new car or ‘fun’ items.
Many parents are forced to take more extreme measures to ensure their children benefit from a university education, with one in six borrowing money or getting in to debt, and one in seven taking a second job or delaying early retirement.
But with parents estimating the bill for university to be in the region of £2,500 per year, totalling £7,500 for a three-year course per child, it’s perhaps not surprising that cutting basic outgoings is often a foregone conclusion.
But while parents are forced to scrimp and save, the poll reveals that students are less willing to sacrifice their lifestyle if they run out of money.
Around one in three (30 per cent) admit they would rather run to their parents when they have no money rather than forego nights out (five per cent), cut back on their food budget (five per cent), get a job (nine per cent) or do more hours at work (11 per cent).
To compound the issue, 85 per cent of parents admitted they would give their child money if asked, with 68 per cent saying they wouldn’t ask for it back.
When asked if they understand budgeting, nearly seven in ten said they were insufficiently taught about finance and were ill-prepared for student life, with nearly a third (31%) saying they taught themselves everything they know about how to manage money.
Dan King, Nationwide’s Head of FlexStudent Current Account, said: “University can be an extremely expensive time for parents and students alike and often parents are expected to cover the shortfall, putting them under increased pressure and resulting in tightening their purse strings.
“For students to manage their own financial situation effectively, they need to understand how finances work and learn to budget, so they can stand on their own two feet.
“From an educational standpoint it’s vital that students are given guidance before and during university life, that’s why Nationwide, as a mutual, has created a student current account that is simple and flexible to use, with an interest-free and fee-free overdraft that puts the student in control.
“It also comes with a whole range of interactive education support and tools at www.yourstudentmoney.co.uk, helping to ease the pressure financially for both parents and students.”
Nationwide’s FlexStudent current account, offers a range of benefits including up to £3,000 interest-free overdraft with no fees, one per cent credit interest on balances up to £1,000, exclusive access to FlexGraduate2 and the chance to win £15,000 to share.