Issue 149

Digging into debt

20th November 2006

In January of this year Swansea Institute computer student Geraint Banks-Wilkinson, 20, from Nantymoel hanged himself just days after his entire overdraft was re-called. "His is the most tragic story of our struggle with debt." commented a Swansea student. Many would agree.

Debt is fast becoming the major issue in student's lives, last year 15,000 fewer students enrolled in higher education, the NUS claim soaring student debt and the increasing cost of education, to students, is to blame.

Poor Students

Students are notorious for their comparative poverty. This means that without government grants or rich parents most students struggle to afford their university life. For most students an interest free overdraft allows them a more flexible budget. Without the overdraft facility it would be difficult for students to afford the significant one time costs of student life, such as fees or rent. Or where this is not the case it allows a lifestyle less constrained by the pressures of a shoe string budget. In short a well managed interest free overdraft is an extremely positive force in student's lives. The banks see themselves as providing an important service to their student customers, allowing them freedom and independence. But any debt, even one to family, can get out of hand and be a very destructive force in a student's life.

Currently all the major high street banks offer an interest free overdraft with their student bank accounts. These overdrafts are designed to make students lives "easier", at least according to the HSBC leaflet. This would be the very same HSBC, which claim their student bank account delivers "freedom and independence", that recalled the overdraft of Geraint Banks-Wilkinson two days before his suicide.

Automated Systems

All the high street banks are run centrally by credit histories and account details. This means that when any overdraft is recalled it is a central decision based solely on the administrative details of each individual account.

So who recalled Geraint Banks- Wilkinson's overdraft? A computer, set to consider his credit history. His mother said at the inquest into his death that "He couldn't get anyone who could tell him they could actually make a decision", which was "so frustrating for him". No one has ownership of decisions, so our bank managers merely administer the human interaction element of banking.

Bank Bribery

The high street banks also try to entice students with promotional offers. Over this year Lloyds TSB offered i-pod nanos to new customers and NatWest is currently offering a five year young persons railcard worth £100. These measures are obviously aimed at appealing to students, in order to have their custom. Some banks refrain from offering such gimmicks, preferring instead to augment their student accounts with services. Barclays offer commission-free foreign money to its account holders, along with an impressive array of add-ons. Some students prefer those banks offering a wider range of free services to its student bank account holders; others prefer the bank with the best promotional offer. Either way the answer is to shop around and always read the small print.

Many banks declined to speak about student debt, NatWest saying "No comment". Halifax had nothing to say at all, even though they claim to have won awards for their service. HSBC, apart from giving an interview, also managed the account of Geraint Banks-Wilkinson before his death and therefore they have the most information concerning them in the public sphere.

The problem of student debt is not going to go away, and in reality, a student loan is not considered in the same light as, for example, a personal loan, as it's considered to be an investment in a futire career. The Advice Centre is on hand on campus to help students who feel their finances are getting out of hand. If students are not able to meet their minimum payments and have outgoings way above their income, an advisor can help. Chris Neuss, one of the Welfare advisors tells students to not panic in these situations, "There's almost always something we can do to help you." Ignoring the problem will create more debt - her advice is to seek help as soon as possible.

What You Need To Know

• Most student bank accounts are the same, all offering similar interest free overdrafts, which are all subject to your own credit history.
• Most banks offer a wide range of student services at no charge. Check each bank for services which might best benefit you.
• Swansea University's Advice centre can help if your finances spiral out of control. If you are having problems meeting your outgoings they can help you deal with creditors, reschedule debt repayments and draw up a financial assessment. The Advice Centre is situated on the ground floor of Fulton House, and hold drop in mornings. Contact them on (01792) 295617.

• Graham Jenkins