The National Union of Students (NUS) wants payday lenders to be banned from advertising at colleges and universities to prevent them from dragging vulnerable students into insurmountable levels of debt.
The campaign, supported by the Universities of Northampton, Northumbria and Swansea, follows major criticism of the payday loans sector by the Office of Fair Trading.
But the regulator itself has recently been branded 'timid' over its failures in regulating the sector effectively (read more).
The high-cost loans are designed to bridge a shortfall for a short period until a borrower’s next payday, but problems can quickly mount if those who are struggling to repay are encouraged to "roll-over" their loans at interest rates which can exceed 4,000% per year.
Last year, prominent payday lender Wonga was caught promoting its loans to students, suggesting that short-term loans could help towards incentives such as holidays (read more).
Payday lender Wonga previously targeted students for its loans.
The NUS has found that as many as one in ten vulnerable students were turning towards high-cost lenders rather than finding cheaper alternatives or seeking advice about financial hardship from university welfare offices.
Last month, 31 credit unions signed up last month to receive a share of government funds designed to help vulnerable people to access credit more affordably (read more).
The Consumer Finance Association (CFA), which represents several major payday lenders, said that reputable lenders would only consider students who were in regular employment.
Its chief executive, Russell Hamblin-Boone, accused the NUS and participating universities of "denying choices" to their "educated and intelligent" students.
"This campaign against advertising on campus will do little to tackle bad lending practice, and discredits the whole industry unjustifiably," he said.
But Pete Mercer, Vice President (Welfare) of the NUS, said it had been necessary to make a stand after it became clear that some lenders were targeting students and the government had failed to act.
"Students are struggling to make ends meet and this is having a real impact on their well-being and their education," he said.
"It's great that these institutions (Northampton, Northumbria, Swansea) have already joined our campaign and I hope that others will soon follow suit."
Keith McDonald
Which4U Editor
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