Jump in parents taking out loans to cover back-to-school expenses

The number of parents taking out loans to cover back-to-school costs has doubled since the pandemic.

Parents are turning to loans to cover back to school costs. Picture: Shirley Way

A growing number of Victorian parents are taking out loans to help cover mounting back-to-school costs.

No-interest education loans issued in Victoria in January and February doubled between 2018 and 2022, new data from banking giant NAB shows.

The loans, provided by NAB and not-for-profit microfinance initiative Good Shepherd, are used by families facing financial hardship to pay for uniforms, books, stationery and computers.

4787 education loans totalling $5.36m were issued to Victorian families over the five years to 2022.

Education loans issued in Victoria doubled between 2018 and 2022.

The average loan amount was $1121.

This year, NAB and Good Shepherd expect to provide more than $775,000 worth of no interest education loans in January and February alone – more than double the amount granted in the same period pre-pandemic.

NAB head of customer vulnerability Mike Chambers said the start of the new school year was a particularly stressful time for some parents.

“January is often when the full impact of Christmas spending hits and on top of this parents are also faced with a list of back-to-school expenses they quickly have to meet,” Mr Chambers said.

“During the pandemic, we saw a spike in no interest loans to help meet the need for laptops and software for remote learning.

“With the cost of living on the rise, we expect to see even more families on low incomes looking to access no interest loans to help manage school costs.”

The start of the school year adds to financial pressure on many families. Picture: Getty

Single mother-of-three Lynda Birch took out a loan last year to pay for her children’s school books and will do the same this year.

The Pakenham resident said the financial support was a “lifesaver”.

“If it wasn’t for the loan the kid’s wouldn’t have their school books,” she said.

“I have a 17-year-old heading into year 12 this year and a five-year-old and six-year-old in primary school.

“My eldest goes to a public school and for books alone this year it was more than $500.

“The costs skyrocket once you hit high school and you have to buy laptops and all new uniforms and books.

“It’s also hard coming off Christmas and the school holidays which are always very expensive.”

Good Shepherd’s director of client services Dave Vicary said no interest loans were an excellent way of helping Australians manage their household budgets.

“With the rising cost of fuel, food and energy prices, we know how much of a financial burden the new school year can be, especially when you’re already on a tight budget,” Mr Vicary said.