Revealed: Glasgow students are the new prey for payday loan lenders

25 March 2019

Accessing Photograph: Jennifer Jones

A short-term, high interest loan company are offering students "pay-day style" loans secured against their government-funded university loan payments

Students are being targeted by a loan company that specialises in using existing government loans to enable short-term money lending, the Glasgow Sloth can reveal.

An influx of sponsored advertisements have appeared on Facebook, encouraging Scottish students to borrow varying amounts of money to help tide them over until their next loan repayment in September.

Sponsored Facebook Advertisement, 23 March 2019. visuals promote access to additional “student loans” using their website.  The loans are only available to students who can provide evidence of receiving UK government loans, SAAS, or NHS student bursaries.

The short-term loan must be repaid from their existing loan allocation, meaning that they are being guaranteed by existing debt rather than income from employment. website showing the loan application process.

The maximum available loan is £350. This can be paid back over six months, leaving the student to pay back a total of £525. Over half the original loan (£175) is being added to the account in interest.

University of Strathclyde student Alice Tod came close to using a payday loan last year.

She said: “I was working in my retail job, on a fixed 12-hour contract. I was reliant on picking up extra hours where I could. The job was perfect during university months, where I could balance my studies with my work, and I was receiving my SAAS student loan alongside it.

“However, come the summer I was really struggling to make ends meet and still had rent to pay.

“I began looking on websites and I put the details in for how much I would need. Because it was “only £200” the interest was ridiculously high. If I took out £500, the interest rate seemed a bit lower, so despite not needing the extra £300 I began filling out the form.

“The amounts that they were asking to have paid back were extortionate – but I was desperate. I just had to make it to September, and I was sure that I could pay it back using my loan.

“As I was filling out the form, one of the friends phoned me, asking what was going on.

“I explained what I was doing – taking the £500 for a better deal, rather than the £200 I needed. He told me that he could lend it to me until September.”

She added: “I was so grateful, and also incredibly lucky, to have a friend who was in the financial position to help me out. I honestly think I was only five minutes from signing up to one of the worst ideas of my life.” and other websites has reignited concerns around the potential hardship caused by this form of short-term arrangement.

Changes to financial rules back in 2014 have meant that short-term, high credit loans are bound by tighter regulation and can attract significant controversy.

The Financial Conduct Authority has recognised that people who have had loans approved when they do not have the income to support it, or who are unaware of the risks of borrowing money in this way, have been misled by the lender. Many are now seeking compensation.

The largest and most recognised payday loan company,, went into administration in August 2018. It collapsed under the weight of reimbursement claims of those previous customers who borrowed money that are now considered to be in breach of financial regulation.

Reuters reported this month that over 40,000 unresolved refund claims have been made against the company, with the Financial Conduct Authority having doubts that this level of compensation will be possible to deliver. The UK Treasury are now looking into alternative ways to support those affected.

Sharon Bell, director of debt charity StepChange Scotland, said that despite the changes to short-term loan regulation, they still receives many calls from those looking for help regarding short-term, high credit loans.

She said: “Young people in particular are at a higher risk, with 29% of their clients being under the age of 25, compared to 18% of our client base over all.”

The founders of boast that their time spent at university as student themselves provide legitimacy to the lending outfit.

They claim to be an “ethical” lending company, only lending a percentage of the student’s loan entitlement. Debt experts, however, warn of taking on financial risk by borrowing money with such high APR rates, like the 1,121% advertised on the social media site.

Bell said: “Younger people, including students, have less experience of money management than older households; borrowing at high cost in advance of a student loan payment may be an indicator of wider financial distress.”

She added: “We would strongly advise anyone facing financial stress to contact a free and impartial debt charity for budgeting help and debt advice, which may help to avoid getting sucked into a spiral of ever-more-expensive borrowing and a bigger debt problem.”

University of Strathclyde Student Union President Matt Crilly echoed StepChange’s concerns about these loans.

He said: “Unfortunately, these companies which are targeting students are taking advantage of an inadequate student support system which leaves students struggling. We would urge students to avoid them.”

Crilly highlighted that there are short-term opportunities available within universities such as Strathclyde. The university can provide financial support and access to short-term interest-free emergency loans for those in need. were approached for comment, but did not respond before publication.

The Glasgow Sloth Campaign: Payday Loans

Have you been affected by these types of student focused short-term, high credit loans? Have you taken out a student payday loan? The Glasgow Sloth are looking to hear from you. You can contact us on or on Twitter and Facebook @theglasgowsloth.

 If you are looking for advice and support related to this story, please check out free resources and advice from Stepchange Scotland.

This Post Has One Comment

  1. Response from Smart-Pig:

    “We are sad to hear that the author and persons mentioned in this article came away with a negative impression of Smart-Pig. We do, however, feel that there has been a slight misrepresentation regarding the nature of our loans and who they would be suitable for.

    The maximum amount you can borrow from Smart-Pig is £350, all our loans are capped at 50% (That’s half of what most other short-term lenders charge). What does this mean? It means you can only ever pay back half of what you borrowed in interest, regardless of the duration of the loan and this applies even if you run into trouble repaying. So, if you borrow £100. The most you will ever pay back is £150, however, it is likely to be much less than this depending on the duration of the loan.

    All our loans come with a 10 day grace period to help with delays in payment, we never charge any late payment fees and have a dedicated customer service team that will do everything they can to help should you fall into trouble when repaying the loan.

    The interest rate may at first appear quite steep, however the way we are required by law to show the APR can be misleading. APR stands for annual percentage rate and is not a true representation of what a short-term loan would cost.

    We are former students ourselves and want to be part of the solution, not the problem. We try to make it as clear as we can that our loans are not for all students; our main aim is to provide a safer alternative to students currently using other short term loans.

    We will never encourage anyone to use our service if they aren’t in a good position to do so; in fact, we actively discourage this. We are pleased to hear that Alice, the student mentioned in the article, found a more suitable solution, and would encourage all students to seek out advice from their University or sites like before coming to us.”

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