Lendwise warns of looming student financial crisis and calls for tailored relief packages to address funding shortfall

The government must act now to avoid a looming student financial crisis according to Rishi Zaveri, chief executive and co-founder of Lendwise, a specialist education finance lender. The UK has almost 2.4 million students in higher education and Zaveri warns they face a growing funding gap unless some form of government-guaranteed finance is introduced.

He believes students should be given access to government-backed loans similar in nature to the coronavirus business interruption loan scheme (CBILS).

“I feel very strongly that what was done for smaller businesses through CBILS and the bounce back loans should have been done for students on a relative basis, particularly those who are key workers.

“There have been many student nurses and NHS workers who have really felt the strain financially, but they’ve had nothing like this to turn to.”

A recent survey of Lendwise borrowers studying postgraduate degrees reveals nearly all (94%) have taken action to boost their finances in the short-term. Over half (53%) of those that were questioned have borrowed money from family or friends, while 46% have drawn money from savings and 14% have begun a new part-time job or increased part-time work.

Lendwise is the only UK-based peer-to-peer lending platform that offers competitively priced loans to post-graduate students. Many of these students borrow from Lendwise to supplement funding from other sources such as government loans, grants or personal savings.

However, since the start of the pandemic, Lendwise has seen a sharp rise in new loan requests and believes this partly due to a lack of funding support. In the three months to March 2020, the number of new applications Lendwise received increased two-fold compared to the same period in 2019.

Zaveri adds: “At Lendwise we endeavour to bridge the gap between the Government postgraduate master’s loan and the cost of undertaking postgraduate study. But if anything, this gap is widening as the pandemic and resulting recession is making it more difficult for students to supplement their funding with part-time work in sectors such as hospitality and retail.

“I’m sure a lot of have had to resort to borrowing at higher rates and some may not have been able to access any form of finance. That sits at odds with the fact that government-backed financing is available to so many employees and business-owners.”

But as well as creating immediate financial challenges for many postgraduate students the pandemic is also affecting their long-term outlook. Two-thirds (66%) of Lendwise borrowers believe their job prospects will be negatively impacted by the pandemic and more than four-fifths (82%) of students are concerned about the state of their finances in the future.

Zaveri concludes: “We would like to see the Government take action to ease the financial pressure on students and ensure they aren’t unfairly burdened for taking the decision to proceed in higher education.

“Failure to act could severely harm the country’s efforts to inspire its bright young minds and dampen their ambitions to study for successful, exciting careers in leading UK companies and industries.”