University bans payday loan ads on campus
The University of East London has become the first UK university to announce a ban on payday loan adverts on campus.
The news comes as data from debt advice charity StepChange showed a big increase in the number of under-25s falling into debt with payday lenders, and reflects a growing concern about the availability of short-term, high-cost loans.
Some of the loans on offer charge huge interest rates, sometimes many thousands of per cent APR. Although lenders say quoting an interest rate in annual terms is not a fair reflection of the cost, customers who roll over debts or take on new ones to cover existing loans can quickly see their debts grow.
UEL said 2,000 of its 28,000 students have dependent children, a group that a recent report by the National Union of Students recently found were most susceptible to the offer of payday loans. To protect students, it said it had decided to ban all payday loan advertising and promotional materials at its campuses.
"The reason we have pioneered the payday loan campaign is that we are committed to ensuring that students do not get into a situation where they are made financially destitute or desperate" said a spokesman for the university.
The NUS’s vice-president, Peter Mercer, welcomed the announcement. "Payday loan lenders try to present themselves as some kind of alternative to government-backed student loans but in reality short-term borrowing often makes students’ financial situation worse rather than better" he said.
”Unscrupulous lenders targeting vulnerable students and other low earners need to be controlled and I am really pleased UEL has launched this campaign, which will help protect its students against the plethora of payday lenders we now see operating within our local communities, high streets and on the internet.”
Figures from StepChange suggest payday loan debt is causing more problems for under-25s than any other age group and the number who are struggling is growing. In 2012, 42% of young clients approached the charity with payday loan debt problems, up from 25% in 2011. The average amount owed on payday loans by this age group also rose, to £1,375, from £1,032 in 2011.
StepChange’s external affairs director, Delroy Corinaldi, said the prominence of payday loan among young people’s problem debts was a "deeply concerning trend".
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