Student Loans | Wonga Slammed Over Student Loans

January 13, 2012 – 2:00 am

Wonga, the short-term money lender, has come under fire for suggesting that its high-interest loans to students are a viable alternative to official Government-backed Student Loans.

A marketing page on the payday lender’s website headed ‘student loans’ claimed that there is “a totally new way of borrowing money to see you through until your next cheque and it’s called Wonga”.

The site, which said that its student loans can be used for things such as holidays to the Canary Islands, then highlighted annual interest rates of 4,214 per cent.

Charities, student groups and consumer bodies said that the company was being “irresponsible” for suggesting that high-interest loans should be part of students’ everyday financial planning.

Pete Mercer, vice-president (welfare) of the National Union of Students, accused Wonga of using “predatory marketing”.

The fury was sparked when Martin Lewis from, the consumer website, posted the Wonga page on Twitter to his 82,000 followers and called the company a “moral disgrace”.

Within hours of him posting the page, which is understood to have been on Wonga’s website for some time, hundreds of people had commented on it. Other Twitter followers accused the company of being “exploitative and misleading”.

Last night Wonga removed the page from its website. It said that the article was “several years old” and “gave rise to misunderstandings”. The company said that it does not actively target students.

Mr Lewis said that official student loans from the Government attract low inflation-linked interest rates and only need to be paid back when a person is earning over 15,000 a year. Wonga loans, meanwhile, need to be paid back over a short period before high interest rates kick in.

Mr Lewis said that Wonga had committed “moral offence number one” by comparing its own loans to official ones, and “moral offence number two” by trying to “suck” students into the “payday loan world”.

He said that Wonga is usually very responsible about how it advertises itself. “However this has overstepped the line,” he said.

The Helena Kennedy Foundation, an education charity that provides financial support to poorer students, accused Wonga of exploiting hard-up students to promote its high-interest loans.

Wes Streeting, the charity’s chief executive, said: “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.”

He said that loans through credit cards and companies like Wonga should always be the last resort for students.

A Wonga spokesman said that students represent a “tiny fraction” of its customers and that the company performs rigorous credit checks on all loan applicants. Around two-thirds of all loan applications are rejected, the company has said.

However the spokesman said: “We do not believe that working, adult students should be excluded from a popular credit option.”

The spokesman added: “We do not actively target students in any way and our marketing is all mainstream, such as on TV and radio. The two web pages in question are examples of the many search engine optimisation pages on our site, which is essentially content covering all aspects of credit.”

Payday loan companies such as Wonga have attracted increasing criticism in recent months for the high interest rates they charge borrowers.



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