By Jenny Shaw and Amy Lobl
The first year living away from home is a crucial test of a student’s ability to manage personal finances, and failure brings high risks. For those who overspend it is easy to fall into debt. For nearly 32,000 UK students this includes the use of risky high interest debt including payday loans.
Purpose-built student accommodation (PBSA) can act as a vital stepping stone to support the development of students’ financial capability. This can be developed further by offering financial capability support embedded within the accommodation environment. Not only does this help reduce stress among students, it also provides valuable skills for the future.
With student accommodation in the UK costing on average £4,834 per year, students in England are left with £146 per week to use for their additional living costs.
Students have the additional challenge of budgeting over the entire academic term, predicting and meeting costs. For many, this is a daunting task – especially when we consider most adults have the much simpler challenge of budgeting monthly.
‘Recent research by Unite Students showed 1.5% of undergraduates and 1% of postgraduates – almost 32,000 – take out payday loans or doorstep lending’
Payday loan companies can be seen as a quick fix option for students who are struggling to make ends meet. Recent research by Unite Students showed 1.5% of undergraduates and 1% of postgraduates – almost 32,000 – take out payday loans or doorstep lending. The annual percentage rate (APR) of a payday loan is typically 1,500%; a rate at which it is easy to fall into a cycle of debt. As well as the immediate and obvious problems, this can impact on a student’s credit rating later in life.
A PBSA halls of residence, whether university owned or third party, can provide an important halfway house between the parental home and full budget management. Halls are usually fully inclusive of bills, and some are still catered, which simplifies the budgeting process.
PBSA also offer a convenient learning environment for students to develop financial management skills. Student Accommodation Offices also have leaflets, website resources and information for students looking to go into the private sector. Students will be exploring how to manage household bills, internet costs and other outgoings which they have not needed to deal with in PBSA.
A positive experience at this stage will help students grow confidence in their ability to manage money, and develop valuable life skills which will equip them to develop a new status: financially independent adults.
Jenny Shaw (pictured) is head of student services at Unite Students and chair of the Unite Foundation.
Amy has worked in the University education sector for over 5 years, at institutions including SOAS and University of Oslo. She currently lives and works in Nairobi, Kenya as Country Manager for Uganda at Uniserv Education.