The number of students using payday loans to get by at university has risen by 136% in the last 10 years, research shows.
In a survey by MoneySuperMarket, over a quarter (26%) of students admitted to using payday loans while at university – up from just a tenth (11%) in 2009.
Despite the university term lasting up to sixteen weeks, a third (31%) of students spend their maintenance loan by week five.
This may explain why 36% also rely on a credit card, compared to 26% 10 years ago.
A third of students choose not to tell their parents about the additional loans they take out, with a quarter (27%) having a “secret” credit card. This is up from 15% 10 years ago.
University students today are also 12% more likely to have a personal loan, at 23%, than they were a decade ago, the research shows.
The students are now 8% more likely to have a second covert current account, at 22%. Respondents are also more likely to have an undisclosed second overdraft, at 20%, which is up 7%.
“There could be a number of reasons for this, including the rising cost of living, increased tuition fees and more expensive household goods,” said Emma Craig, a money spokesperson at MoneySuperMarket.
“However, payday loans are rarely the most cost efficient way to borrow and should be a last resort.
“If you’re a student heading off to university this month, now is a good time to think about how you’re going to manage your finances. Creating a budget is a great place to start and will help you work out how much you have to spend each week.”
Craig added: “If you think you may need to borrow money, taking out a student current account with an interest free overdraft is a good option.
“Shop around to ensure you’re choosing the current account that’s best for you.”
There was, however, a way in which students had improved their finances. Though students today are more likely to use payday loans, credit cards and personal loans, students 10 years ago were actually borrowing a greater amount.
Over a third (36%) of the previous generation borrowed an extra £1,000 or more, in addition to their maintenance loan, compared to a fifth (23%) of students today.