As of 2023, outstanding loan debt owed by students in Scotland reached a record £7.6 billion. This number has only been climbing over the years, with the number haven almost doubled since 2018.
With September 2024 approaching, many students across Scotland are looking forward to starting their new year. For many, this can come with a lot of financial concern.
Financial Support for Students
Whilst we all struggle to keep up with rising costs, students are no different. Student loans and bursaries are hoped to reflect this.
Higher education students who would have applied for the Care Experienced Accommodation Grant, will now be eligible to apply for a 12-month support package for the first time this year. This is in response to concerns over students struggling to pay for essentials and priority payments such as rent during the summer.
This year, the annual support package will also be increased by £2,400 to £11,400 for undergraduates.
We urge any students in need of financial support to make their applications as early as possible. Delayed applications can result in delayed pay and harm your financial situation further. Check your deadline dates for The Student Awards Agency Scotland (SAAS) here.
Students Working Longer Hours to Cope with Rising Costs
Students, alike all of us across Scotland, are looking for financial support to cover the cost of living crisis. With a record 56% of UK students working whilst studying. The cost of living is likely a direct cause of this new record number. Before 2021, two-thirds of students had no paid employment during term time. With this number not only rising in 2024, but students were also found to work longer hours than students from previous years. On top of this, the report by the Higher Education Policy Institute (Hepi) found that 33% of students who didn’t work during term time said it was because they couldn’t find a suitable job. Only 23% of students said that they didn’t need to work during term time.
Unfortunately, this creates a strong imbalance between students who must split their time between study and long working hours and students who are able to put their full attention to their studies. On average, students with part time jobs would spend 48 hours per week on study and work, with some reaching 56 hour weeks. When comparing this to the average work week for adults, at 37 hours per week, this is an extreme jump. The long hours can lead to students over-working themselves and become more inclined to drop out and experience a reduced chance of gaining a higher grade.
Student Foodbank Use Increased
This year, a new report by National Union of Students found that student foodbank use has doubled in the last 2 years. With 7% of students reporting foodbank use in the 2021/ 2022 academic year to 14% in 2023/ 2024. The same study found that 45% of students were left with £50 or less per month after housing costs in 2024. Whereas, 42% of students in a 2022 report were left with £100 or less per month.
It was also reported that for the 2023/ 2024 academic year:
- 75% of students said their loan or bursary did not comfortably cover the cost of living.
- 74% said they cut back on socialising because of rising costs.
- 55% said they cut back on food.
- 13% said they have experienced homelessness.
The impact of financial difficulties on mental health is a problem for all of us, students included. 40% of students reported a decrease in their mental health since last year.
Young People in Debt
44% of people in the UK get their first credit card between 18 and 24 years old. Nearly half of people between 18 and 24 years of age also held 3 or more credit cards. However, despite this, their understanding of how credit cards work was lacking. 75% of young people surveyed did not know what APR stood for and 41% we unable to say when they would start paying interest.
53% of 18-24 year olds have missed a payment in the previous 2 years as well as 11% increasing their credit limit due to the cost of living crisis.
Money Management for Students
Debt building from credit cards, overdrafts, everyday loans and guarantor loans are real possibilities for young people and students. Once you agree to any type of credit or financial agreement such as these, you must follow through on the payments otherwise it will be legally considered as debt.
We know that circumstances can change and students especially can struggle as financial support varies through the year. Make sure to bear this in mind when agreeing to any type of credit agreement.
The key to managing finances, including an overdraft successfully, is to fully understand their potential pitfalls as well as how and when you will pay it all back. It’s important to create a realistic budget for this that includes emergency funds.
Our main piece of advice is to fully research the financial agreements you enter into beforehand and have a financial plan to stay on top of your repayments. Opportunities such as a 0% interest rate overdraft are an appealing choice for students, however repayments and eventual fees can accumulate quickly. Find out more information on overdrafts as a student.
Overdraft Fees
Many banks offer student accounts with a large overdraft at 0% interest (for a certain period of time). For a lot of students, this can be the difference between purchasing essential items and going without. It can be a great tool for when funds are running low.
In the National Student Money Survey by Save The Student, 35% of students said that they use their student overdraft as a source of income. It’s tempting to view your student overdraft as free money however, it’s important to understand that this is a loan to your bank. It should be used as an emergency fund or as an option to dip into when necessary, with the awareness that it will need to be paid back, ideally as soon as possible.
During Freshers week as a student, many banks will approach you with offers for student accounts that come with large, and often interest-free (for a time!) overdrafts. Make sure to do your research into all available options before committing to one – if any. Read up on the advantages and disadvantages of student overdrafts before making any decisions.
Buy Now Pay Later
Buy Now Pay Later providers such as Klarna, PayPal, Clearpay and Amazon can be a great option for you spread costs. So many stores offer Buy Now Pay Later payments to help with clothing, food, and student essentials such as stationery, textbooks, kitchen equipment, and even online subscriptions providing access to articles. This can look like a great option; however, this is only if you are able to manage these ongoing payments.
The Dangers of Buy Now Pay Later
It’s important to understand that Buy Now Pay later is a form of credit. By taking out this credit, you are agreeing that Buy Now Pay Later providers can take action against you if you do not pay this back on time. You will be in debt to the company. This can lead to potential fees, making it harder to pay back as well as the potential for debt collection action. On top of this, Buy Now Pay Later is not a regulated agreement, meaning it is easy to take out more than you can afford.
Help with Debt as a Student
When you’re studying, you’re often on a very low income and have to rely on bursaries and student loans in order to cover your living costs. Sometimes it’s possible to find part-time employment that works around your studies, but even with this you may still find that your money only stretches so far.
If you’re struggling to make the payments on credit cards, store cards or loans as well as paying your rent and buying food, you may need debt help. The longer you wait, the worse your situation will get.
Get in touch with a team of experienced debt advisers at Trust Deed Scotland ® for tailored, confidential and non-judgmental advice. We understand that people from all walks of life can find themselves dealing with unaffordable debt for various reasons. We will never judge.
Get in touch today by calling 0141 221 0999. Alternatively, find out if you’re eligible to apply for a formal Scottish debt solution through the Trust Deed Scotland Wizard ® tool. You can also reach us on WhatsApp if you are unable to take a call.