UCAS will stop sending out emails advertising private student loan provider Future Finance, the student charity announced today, following a backlash over its marketing of high cost loans.
The charity, in charge of university applications and a trusted source of information for students, said it will ‘pause its activity with private loans companies’ and set up a group to advise on future adverts.
It comes after it took heavy criticism for marketing the private loan provider, which charges a representative APR of 15.9 per cent and structures repayments in a way which could see someone borrowing £5,000 pay back £13,700.
Hang up: UCAS will pause advertising private loan providers
After This is Money asked UCAS at the end of January why it was still marketing the adverts, the charity said it had made a number of alterations to the adverts since they last appeared in emails to students in August 2019.
The latest adverts, sent out last month, included a disclaimer telling students to check eligibility for government funding before considering alternative funding options and that the charity was not endorsing the adverts.
It told us in a statement that it had made the differences between Student Loans Company finance and private loans ‘more explicit’, highlighted private providers’ APRs, reviewed which groups may consider private loans and targeted its emails accordingly, and advised all students to use government funding first.
However, this was not enough to prevent it being criticised.
Student money website Save the Student posted screenshots of the UCAS email adverts on social media platform Twitter and said: ‘Adding a “disclaimer” encouraging students to look for money elsewhere does not make this okay.
‘UCAS is considered to be a trusted organisation by students across the UK and should not be abusing its position by partnering or working with a commercial loan company.’
Student money website Save the Student reported last week that UCAS was still sending out emails advertising Future Finance, despite criticism of the practice last year
It appears to have taken the criticism on board. UCAS said in a statement posted on its website today: ‘UCAS takes its responsibility to provide neutral and trusted information very seriously.
‘A key role we play for students is providing them with information and advice on financial support and choices, such as opening their first student bank account.
‘It is clear funding options are continuing to evolve and the cost of living while at university is a key consideration for students. It is our responsibility to help students understand and navigate all their choices.
‘As this is a developing market, we listen to feedback from students and valued colleagues across the education and financial sectors to ensure we provide students with appropriate choices, including those that are commercially available.
‘Based on that feedback, we decided to pause our activity with private loans companies, and no further activity is currently planned.’
Someone who borrowed £5,000 under Future Finance’s representative example would pay back nearly £13,700 over a 108 month term
It added: ‘With our new UCAS Media Advisory Group, which we are currently recruiting to, we will continue to review this maturing market and further develop a set of principles to incorporate into our advertising framework.
‘As a registered charity, UCAS depends on almost half its income from UCAS Media’s campaigns, keeping application fees low.’
Future Finance said in a statement: ‘We continue to provide vital funding to both undergraduate and postgraduate students across the UK.
‘We are a responsible lender and remain committed to ensuring students make the right decisions based on their circumstances.
‘There is a clear and growing funding gap across UK higher education.
‘While government loans continue to be the first port of call, most students face a significant shortfall, meaning private providers like ourselves remain an important part of the landscape.
‘No-one should be denied the chance to pursue higher education simply because they lack the financial means.
‘We fill the gap where students do not have family support, the option to work, or access to traditional forms of finance.
‘We also seek to stop students turning to undesirable short-term alternatives, such as payday lenders, or other more dangerous activities, such as gambling.
‘Since we were founded in 2014, we have lent over £135million to 20,000 students, across the majority of universities in the UK.
‘We are an Financial Conduct Authority regulated company and are fully committed to responsible lending practices.’
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