Thousands of students could be directed to payday lenders by a growing pack of online brokers based overseas, as a new report warns that undergraduates are becoming resigned to debt.
The National Union of Students has stepped up its campaign to prevent payday lenders from advertising on campuses across Britain after its own research found a "worrying" number of undergraduates are applying for short-term loans, which typically charge at least 1,000 per cent in APR interest.
The research with accommodation group Unite published this week found: "Rather than a two-way split between those who see debt as a problem versus those who do not, a third approach is apparent in which some students are merely resigned to the inevitability of debt."
NUS Scotland has a campaign to encourage students to make their universities "shark-free zones", claiming that some payday lenders are "targeting students specifically".
Dundee and Heriot-Watt are among universities which have taken steps to limit payday lenders' access to students.
However, debt charities warn that students are unavoidably at risk online, where typing "student loans" into a search engine produces multiple results for websites that claim to offer "quick approval" for loans, even if the applicant is unemployed.
Many of these sites are actually payday loan brokers, which use search engine optimisation to appear in results for common inquiries. The websites, often based abroad, then pass on customer details to actual payday lenders, receiving referral fees of at least £50 in the process.
Clues include descriptions in poor English and offers which seem too good to be true, including no credit checks or application fees.
David Rodger, chief executive of the Debt Foundation, said: "While this is a rampant online problem, it is effectively hidden from most people because you have to do the initial search for a payday loan, unlike the more upfront marketing efforts of mainstream online and high street payday lenders.
Borrowers find themselves passed on to different companies and end up not even understanding who they are borrowing from, let alone what the terms are or how much it's going to cost them if they are late with their repayments."
He added: "Because these are simply marketing sites, they pop up and quickly disappear, making them difficult to track, let alone regulate, and leaving huge amounts of distress in their wake."
An "alternative" payday lender for students, Smart Pig, started by a group of undergraduates concerned at how they were being treated by the sector, says its "pricing, loan terms, tangible ethical safeguards and internal procedures mean our company works very differently from typical payday loan companies".
It cites a 10-day penalty-free grace period if payments are delayed and a safety net whereby students never pay more than half of what they borrow in interest, as well as a ban on controversial "rollovers".
Although a small minority — 2 per cent — of students have admitted receiving payday loans or "doorstep cash" in the past year, this could represent up to 46,000 undergraduates if the findings were replicated nationwide.
Previous research carried out by the NUS also found that 10 per cent of college students aged 19 and over had taken out "high risk credit", with vulnerable students particularly drawn to payday loans.
There are plenty of free and independent sources of debt advice, like Glasgow-based Debt Support Trust, that anyone in payday loan trouble should consult before going any further
Earlier this month the Competition and Markets Authority published its own probe into the sector.
It recommended that so-called lead generators explicitly disclose their business model, and said it was drawing up plans for a price comparison site for payday lenders.