Sainsbury’s: Student costs will lead to more loans

Sainsbury’s Bank has predicted that a large amount of money will be lent in the form of personal loans to cover the costs of university this academic year.

According to the financial service provider, the increase in tuition fees from £1,175 to £3,000 could lead to an increase in living costs of between 17 and 21 per cent for an average student.

Based on this, Sainsbury’s estimates that £53.8 million worth of loans will be lent, mainly to parents, to cover the expenses.

Despite the fact that a lot of people turn to personal loans to help them cover various costs, Sainsbury’s claims that many do not make enough effort to get themselves the best deal. Around four in ten people taking out a loan only get one quote, the company states.

Steven Baillie, loans manager at Sainsbury’s Bank, said: "As students go back to university, many will face a significant increase in their living expenses.

"As well as students taking on paid employment to help cover this cost, some of their parents are also taking out personal loans to help.  However, people need to ensure that if they are going to do this, they shop around for a competitive rate."

The company claims that its headline annual interest rate of 6.5 per cent is better than that offered by Tesco, Marks & Spencer, Natwest and Egg. This quoted rate is based on an amount of £10,000 repaid over 60 months without insurance.