Pay day loan site, Wonga, has been slated for targeting university students and suggesting their one-day loans are a reasonable subsidy for student loans.
The “payday loan good guys”, who boast a typical APR of 4214%, are termed ‘irresponsible’ and ‘predatory’ by Pete Mercer, Vice-President of the National Union of Students. Wonga have amended their website and withdrawn the misleading advertising targeting students.
Wonga is accused of manipulating its customers by inferring its high interest rate loans are similarly comparable to student loans, which have a typical 1.5% APR.
The short term loan website initially came under fire when Martin Lewis of Moneysavingexpert.com tweeted: ‘Wonga you’re a moral disgrace’ and created a #WongaLeaveKidsAlone thread, in which outraged followers exposed the deceptive claims of the offensive student friendly webpage. One tweet read: ‘I can’t believe Wonga claim that student loans damage credit rating!’
Wes Streeting, Chief Executive of The Helena Kennedy Foundation for Underprivileged Students, drew attention to the current student financial climate. Recent university cuts, increased tuition fees and reduced support from government organisations leave students more financially insecure than ever. Streeting says: ‘While universities are cutting back on financial support for students it is clear that legal loan sharks like Wonga are moving in for the kill.’
Frighteningly, the NUS advise that Wonga offers a flexible alternative to government student loans, the Guardian reports. Whilst government loans often result in students applying for a larger loan than they need, the short term loan company has an advantage: ‘You only borrow it for a month and pay the loan back on a day that suits.’
Wonga are responding to the assault with the assurance that they ‘rigorously’ assess loan applications and deny two thirds of those received. They maintain that ‘working, adult students should not be excluded from a popular credit option.’