Bank of Ireland debunks student lending myth

Over 8 in 10 clear their Credit Card bill most months
Average weekly income is €109
65% budget their expenses each month

Research conducted on behalf of Bank of Ireland reveals that 3rd level students are the best performing customer group when it comes to managing their money and borrowings. Just one in five student customers have a credit card, only one in seven have a personal or motor loan and more than half of them are regular savers. Customer satisfaction is also extremely high among 3rd level student customers with 82% satisfied with their financial institution.

According to Patrick Farrell, Marketing Manager, Personal Banking, Bank of Ireland "We have been involved in the student lending market for decades and, despite perceptions to the contrary, the reality is that students are exceptionally good at managing their debt and very financially savvy. We lend prudently, taking into consideration each student's needs and circumstances. Most lending is based on a real need such as educational fees or living expenses while in education. Because of our long-standing relationship and understanding of the student market we are able to deliver meaningful products such as our nine-month interest-free grant advance overdraft and travel loan.

"We do not believe in allowing students build up massive debts that could become a burden to them in the early years of employment - this would not be in the interest of either our customers or our business. Our findings show that the mature attitude and behavior of 3rd level students in relation to their finances, without doubt debunks the myth that there is a student lending issue in Ireland today," he concluded.

Bank of Ireland's own student customer statistics support the claim - two-thirds of student loans are under €2,000 and student loans have the lowest level of bad debt. Of those students with borrowings, 73% are personal loans and 27% are overdrafts and the average loan term is just 21 months. Income among students with loans is more than adequate to support the level of borrowing with 62% of these customers stating a net monthly average income of €536. Nine in ten student customers have a parental indemnity in place.

The average student loan from financial institutions is just €1,589 and paying for course fees (37%), travel (36%), living expenses (36%) and course materials (16%) are the main reasons given for student loans. As these reasons would suggest, the majority of loans are taken out in the autumn or in summer, when students are either beginning the college year or preparing to travel abroad to work.

When it comes to credit cards over two-thirds of students clear their credit card bill every month and a further 25% do so on a regular basis. Usage is also very low with 35% rarely using it, 40% using it two or three times a month, 15% once a week and 10% more frequently. This is in direct contrast to the 50% of non-student credit card customers who clear their balance each month and who on average use their cards more frequently - 23% once a week, 22% 2-3 times a month, 21% once a month and the remaining 34% less often.

The research also revealed that 3rd level students are firm believers in saving for their future and nine in ten believe that it is important to do so. 54% of students have a savings account into which they deposit money weekly (18%), monthly (28%) or at various intervals. Rainy days (31%) and holidays (29%) are the main savings goals followed by education (24%) and cars (6%).

For reference:
Patrick Farrell
Marketing Manager
Personal Banking
Bank of Ireland
Ph: (01) 604 3739

Anne Mathews
Group Corporate Communications
Bank of Ireland Head Office
Ph: 01 604 3836
Mob. 087 246 0358

Sources of Market Research Information: