The cash-strapped student is a little bit of a stereotype. But it’s one that’s rooted in reality. When you’re setting out for the first time on your own, using borrowed money and without any prospect of a serious career until your studies are complete, the chances are that you won’t have the cash to hand to be able to do all of the things that you’d ideally like.
Consequently, many students look to borrowing to see them through the three years (or thereabouts) it takes to get through a university degree.
Why are Students taking out Loans?
Students get loans for all sorts of reasons. Of these, by far the most popular is a new car, which represents more than a third of all new enquiries. The deposit on a mortgage, or on a rented property, represents another compelling reason to borrow. In some cases, the student might be looking to optimise their existing debt, and to consolidate it into a single package. Other sorts of spending are more frivolous – a holiday or a wedding can be financed through debt. You might dismiss this as unwise or even reckless, but the fact is that not all debt is equally burdensome.
Why Loans aren’t always Bad
If you borrow money, spend it on the things you like, and then later, having earned some money, you’re able to pay the lender back with a little bit of interest. There’s nothing inherently wrong with this arrangement. In many cases, it’s actually reckless to stick strictly to the ‘neither a borrower or lender be’ mantra, because it can actually lead to money being wasted. Remember that in Hamlet, the line referred to borrowing between friends, not from an outside lender.
For example, if you need to be able to drive to get a job to pay for a car, then it makes sense to borrow the money to get behind the wheel in the first place.
Trouble comes in, of course, where the borrowing is reckless. The person doing it might not have a coherent plan to pay the money back. Moreover, they might run into circumstances that interfere with their ability to
Payday lenders have a (probably deserved) reputation as predators, looking to gobble up vulnerable people who have run into financial difficulty. But not all online lenders providing payday loans are like that. In fact, some payday lenders are run by former students who’ve run into difficulty themselves, and who are keen to prevent others from falling into the same trap.