Let’s start with a bold assertion; there are some demographics that just don’t like students. In fairness, this ethos is especially prevalent among those who chose not to pursue higher education and instead entered the world of work straight from school, this creates a clear and largely unnecessary divide between those with ‘street smarts’ and others with ‘book smarts’ which does a disservice to both demographics, and devalues the success that individuals achieve regardless of their background.
It’s important to take into consideration the struggles that modern age students are facing, especially those struggles that have to do with money. Let’s not forget that it can be particularly hard to balance tuition fees and living expenses when studying (alongside social drinking and hedonistic nights out). With tuition prices already inflated in the U.S. and rising exponentially in the UK, today’s graduates from the developed world are usually forced to start their careers in heavy debt and can often face early pressure to repay this by lenders. Even if you have misconceptions about students and dislike the lifestyle, surely you wouldn’t wish this even on your worst enemy.
Given this and the pressing need to fund living costs, many students turn to the short-term lending market. This is reflected in the popularity of student-centric lenders such as Smart Pig, which is popular in social media.
While students may contribute heavily to a short-term loan sector that is now worth an estimated £2 billion, there are, however, alternatives that provide a wider range of lending options. It is important that students in search of funds consider these carefully, as this helps them make an informed decision that strikes the delicate and oh-so difficult to achieve balance between lending responsibly and keeping their cupboards full!
Here are some alternatives to short-term lending in the modern age:
1. Consider a Credit Union Loan
One of the first and most viable alternatives is a credit union loan. Although this still requires a lending agreement and a subsequent repayment plan that must be adhered to, credit unions deliver more affordable loans and additional advice that enables applicants to organically improve their credit scores. The bad news is that you can’t pick to only get the money, whether you like it or not, you are getting some advice as well.
The primary difference is that the organisations behind credit unions are usually non-profit in their nature, and are therefore likely to consist of community members and local activists. This means that while they may lack the financial power and wealth to fund nationwide advertising campaigns, they have far lower commercial overheads and are therefore able to charge lower interest rates on individual loans. The credit union market is also ahead of the short-term loan sector in terms of regulation and capped at a manageable rate, so you are unlikely to be left with a pile of magic beans while staring at a spiralling beanstalk of debt!
This capped rate is fixed at 42.6%, meaning the credit unions charge a premium that offers fairness and transparency to all parties involved. While the commercial short-term loan sector is now following suit, the minimum interest rate is far higher, while the reputation of credit unions also tends to be far superior. The constantly changing nature of the market means that credit unions are expected to grow exponentially in the next decade.
2. Research Hardship Funds and Bank Overdraft Solutions
While short-term loans are extremely well marketed and capable of targeting specific demographics, you should beware of the lure of advertising and its capacity to turn ordinary people into drooling, mindless sheep. It is therefore the responsibility of each individual student to research the market and select an option to meet their precise needs. There is certainly a wide range of choice in the modern market, so the key is to identify, understand and explore relevant options before taking a full-length plunge.
For students who are generally struggling to make ends meet, fundamental steps are required to provide financial relief. In this instance, your first step should be to approach your university or Student Union Group directly, as this will offer you access to genuine advice and guidance. They will also be able to provide practical help in the form of hardship funding, which is by no means as dramatic or fatalistic as it may seem. Instead, it offers a practical solution to short-term funding issues without triggering spiralling debt liability.
So long as you can verify your financial issues and are unable to afford the fundamental staples of everyday living (such as food or accommodation), you can secure hardship payments in the form of either lump sum or regular instalments. This offers you flexibility in terms of how you receive the money, which in turn means that you can tailor the solution to offer the best possible relief. In most instances you will not have to pay this capital back, and while larger sums will need to be at least partially repaid, you will not be forced to factor in interest rates. If you are a struggling student this is probably the best news you have heard all day, and it’s the equivalent of finding a discarded £5 note in an old, crumpled jacket.
If your arrears are short-term and unlikely to continue indefinitely, it may also be worth asking your bank for an overdraft (or an extension of your existing agreement). This is usually seen as an investment by banks, who expect graduates to develop high earning potential once they have concluded their studies. If your bank is not forthcoming, consider comparing the market to find a service provider that will.
3. Become a Freelancer
The lending option that you choose may also depend on your outlook and philosophy as an individual, with more proactive and aggressive students likely to be enticed by the concept of freelancing. While there are obvious constraints associated with pursuing higher education that force you to prioritise your studies ahead of any other endeavours, those with a positive outlook are able to push themselves, optimise their use of time and utilise their burgeoning skills to generate income. This is the ultimate dream for students (at least those that are willing to wake up before the glare of the midday sun!)
After all, students are learning and developing a marketable skill that they hope to turn into a career when they graduate, so there is no reason why they cannot monetise these abilities while still at university. To make this a success, the key is to initially focus on your knowledge base and the innate characteristics that will help you to execute them (presuming that you have some). This will help you to create a framework for your output as a freelancer, while also ensuring that you minimise any associated start-up costs and make as much money as possible while working.
The next step is to make sure that you have access to the technological tools and resources that create simplified working processes, and today’s students are fortunate that this marketplace is extremely well developed in 2015. In addition to this, many of these resources can be integrated with one another to create increasingly sophisticated and developed tools, making it possible to create to-do lists and share these remotely with partners. Resources such as Trello and Kanban are particularly compatible with one another, meaning that they can be combined to make remote working quicker, easier and the remote equivalent of a quiet drink with friends.
Along with a rigid and carefully planned schedule, these tools can help you to optimise your freelance activities while studying. This can help you to optimise your earning potential as a student and provides an empowering alternative to short-term loans, so long as you orgainsed, determined and capable of resisting the lure of a mid-afternoon drink.
These ideas not only serve as viable alternatives to short-term lending, but they also provide options that can enable you to build a brighter, exciting and more productive future! Whether this is in the form of a positive credit rating or invaluable work experience, the right choice can help ease both your experience as a student and your life once you have graduated.
If you are a student, this is great news that encourages you to think more responsibility. If you are someone who has previously expressed dislike for students, now is the time to admit you were wrong and accept the struggles that aspiring graduates around the world are facing.