Students struggle to find loans as interest rates soar
STUDENTS are finding it harder than ever to secure a bank loan as institutions set interest rates as high as 14.3pc.
Many students are trying to take out loans to tide them over until their first grant cheque arrives or they can find a part-time job.
However, the Union of Students in Ireland (USI) has warned that, like small businesses, students are facing a struggle to secure even small personal loans of a few thousand euro.
Many institutions also want a parent to sign as guarantor.
A student taking out a €3,000 loan with Ulster Bank with repayments spread over a year will be charged an interest rate of 14.3pc.
Bank of Ireland and AIB both offer special reduced rates for students of 11.9pc and 9.45pc respectively, while the credit union has an education loan rate of 5.5pc.
Gary Redmond, president of USI, said it is an extremely expensive time of year for students, who have to stump up €1,500 for the student services charge as well as separate college levies of around €150 to cover the cost of sports centres and other facilities.
This is on top of rent deposits and hundreds of euro for books and travel costs. "Students are finding it more difficult to get loans because the banks aren't as willing to lend as they were in the past," he said.
"A lot of students have to get their parents to go guarantor for them but the difficulty is a lot of parents have seen their wages fall or are now unemployed," he added.
Mr Redmond warned students taking out loans on the basis of eventually finding a part-time job that the market is extremely tight.
"It used to be the case that students didn't have to take out as many loans because they were able to work part-time or over the summer and save up.
"We're seeing a huge problem now because students can't find part-time jobs," he added.
He said the delay in students getting their grants was exacerbating the problem. In the last academic year, some students were waiting as long as seven months.
"The first grant payment should be arriving now or early in October but last year some (students) didn't get it until March or April.
"The VECs (Vocational Education Committees) have reduced staff numbers because of the recruitment embargo and they are dealing with much higher volumes of applications, so it looks like it will be even worse this year," he added.