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Taking the Wonga?


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Student loans, student debt, unpaid overdraft and owing the parents money is pretty much a way of life for the modern day student.

A degree doesn’t only mean academic achievement, but nowadays the term student is synonymous with debt and with universities planning to cut bursaries, opting for fee waivers instead and increasing fees, debt is going to be more of a norm for students than ever before.

Short term loan company Wonga have been criticised in the wake of this debt realisation for their targeting of students in their marketing. They have been accused of downplaying the seriousness of short term loans with high interest rates. Wonga even went so far as to add that its loans, with an average APR of 4,214%, seemed like a better option than student loans or low interest student overdrafts.

The chief executive of the Helena Kennedy Foundation and deputy head of the Independent Taskforce on Student Finance Information, Wes Streeting, says short term private lenders such as Wonga were “going in for the kill”, specifically targeting vulnerable students in wake of the news of buraries would be a thing of the past.

Streeting went on to add that students should always look to the universities, The Student Loan Company and grant and bursary options for support and commercial debt should always be seen as the last resort and not a viable alternative.

The problem with commercial debt and short term money lenders like Wonga , he says, is “that people will get themselves into eye-watering levels debt and what may be intended as a short term loan can actually end up being a trap into a cycle of debt that students can’t escape from.”

Pete Mercer, vice-president of the National Union of Students, says: “Wonga should immediately withdraw this predatory marketing, which contains information that appears to be inaccurate, and is aimed at financially vulnerable young people”

Streeting also noted that Wonga's marketing strategy should make universities wake up and realise the extent of the hardship of student financial problems and management. He says: “Universities should think very seriously about the consequences of their students having to turn to commercial lenders to afford the cost of studying.

“I want universities to start seeing the signs of growing crisis in student finance and reverse the cuts they have planned. This is a crisis that can be avoided but universities seem to walking into it.”

Wonga responded to the attacks with a statement maintaining that “students represent a tiny fraction of our customers and need to have a regular income, just like any customer, to be considered.” They claim that “students underwent rigorous checks on their applications” but they believe that “working, adult students shouldn’t be excluded from a popular credit option.”

Wonga further denied that they actively target vulnerable students but “merely highlight the risk and high cost of unauthorised overdraft charges plus the potential trap of long term debt versus a short term solution.”

In the current economic climate, I think universities are reasserting their business identities often favouring profit over students and student welfare. With the issues of rising tuitition fees and less grants and bursaries, can Wonga really be blamed for recognising a business opportunity?

Personally, I am very responsible with my funds while studying at university but live on a very tight and limiting budget, but that does not mean I have not experienced the allure and temptation of short term loans such as those offered by wonga, especially when your card is declined in the local supermarket- a very embarrassing event many students will have experienced.

According to the Independent though, Trading Standards are finally investigating short term lenders such as Wonga under claims they don’t check applications to see whether customers can ever repay the loans -thus resulting in a debt spiral.

For students short term loans, and long term loans, and anything resulting in debt is an expected consequence of student life and it only seems like those debt margins and that minus sign in your overdraft is going to become a permanent fixture of graduate life.

If you need free advice on student finance and planning then this guide by Payplan, an unbranded pay day loan advice guide, can answer any short term or long term answers you may have about loans.

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