Parents forced to take out no-interest loans to cover back-to-school supplies

“I start doing things for the kids during the year to prepare and help cover the costs, and it still overwhelms me,” says Australian mum-of-four Belinda. 

The cost-of-living strain is continuing to crush Australian families, with more parents taking out loans to pay for back-to-school supplies.  

Mum-of-four, Belinda, said she has struggled to keep up with the ever-increasing cost of school requirements despite being good at budgeting and preparing for the new year months in advance. 

She joins the thousands of parents who have taken out a no-interest loan to cover the essentials, a scheme she called a “godsend” for her family. 

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The cost-of-living crisis has caused families to take out loans to cover their kids' school essentials. Source: NCA NewsWire / Sarah Marshall

Parents “overwhelmed” with rising back-to-school supplies costs

“It has become so hard at the end of the year, just before Christmas, when the schools release the uniform, book lists and now technology requirements,” says Belinda, who has two children in primary school and two in high school. 

“And I think, ‘How on earth are going to pay for this?’”

“I’m good with it all [budgeting],” she continued. “I start doing things for the kids during the year to prepare and help cover the costs. I look at second-hand uniform options, what I can recycle from one child to another, but sometimes they need it new, and it all still overwhelms me.” 

For the last 20 years, NAB and Good Shepherd have partnered to support families who are struggling to pay for school essentials. 

Nearly one million families, just like Belinda’s, have taken out a no-interest loan; a figure the banks are predicting to increase further. 

“With higher petrol prices, grocery bills and energy costs, Australians are facing a tougher time to also get their kids ready for the 2024 school year,” said Good Shepherd executive general manager Dave Vicary.

He has urged parents who are in need to consider a no-interest loan rather than a payday loan, which can attract higher interest rates. 

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Families are "overwhelmed" by the rising back-to-school supply costs. Source: NCA NewsWire / David Crosling

No-interest loan rates have doubled since the pandemic

NAB is anticipating more than a total of $640,000 in loans being taken out by struggling families across Australia to cover back-to-school essentials, such as books, uniforms, fees and stationery. 

The bank has reported a huge spike in applicants as the cost of living strain continues, with NAB predicting parents will take out an average of $1237 per loan.

Over the last five years, there has been a 73 per cent increase in families turning to the bank scheme. These figures have doubled since the pandemic. 

“The start of the year is often when the full impact of festive spending hits just as families are facing new costs and long lists of back-to-school expenses they quickly have to meet,” said NAB’s head of customer Vulnerability Mike Chambers. 

“With the cost of living continuing to rise, we expect to see more families on low incomes turn to a no-interest loan to help them manage higher back-to-school costs.”

Originally published as Parents forced to take out no-interest loans to cover back-to-school supplies