Back-to-school costs leaving 36% of families in debt, survey finds

More parents are turning to moneylenders to meet the costs of getting their children ready for school.

The latest, annual back-to-school survey by the Irish League of Credit Unions has found that getting children equipped for starting or returning to school next month is costing an average of €999 for a primary school pupil and €1,379 for a secondary school student.

Two-thirds of families say the outlay puts them under financial pressure and one-third of families are going into debt to cover the costs this year — a proportion that has risen to 36%, from 29% last year, despite the fact that the costs have fallen slightly.

A further third of parents who do not go into debt nevertheless find the return to school a financial burden. It forces them to cut back on other basics, such as household bills or food.

Even then, 31% of parents say they will have to deny their children certain school items (25% said so last year). 

Seven in 10 of those parents will have to keep their children out of extracurricular activities and four in 10 will not be able to buy them new shoes.

One in three parents say spending on family holidays is in the firing line, as they tighten their belts for this expensive time of year.

Most worrying is the increase in the number of parents using moneylenders to buy schoolbooks, uniforms, and shoes for their children.

Of those who are in debt due to back-to-school costs, more than one in four (27%) have borrowed the cash from a moneylender — a substantial increase on the 20% who were in the same position last year.

More than half of this group said they had borrowed at least €400, but a quarter said they had borrowed more than €800, and they may have to pay back hundreds more in interest.

Half of those who used moneylenders said they had no other choice, as they had a bad credit history, while the rest said they needed a guarantee of getting the money and they could not have the same certainty with banks or credit unions, which have more stringent loan-approval processes.

Paul Bailey, spokesman for the Irish League of Credit Unions, warned parents that licenced moneylenders were legally allowed charge interest rates as high as 188%, which could tie borrowers up in a cycle of debt indefinitely.

“We would seriously urge parents to reconsider going this route,” he said.

He advised parents to talk to their credit union about their situation, even where they had a poor credit history, and to consider availing of the personal micro-credit scheme operated by many credit unions, specifically for social-welfare recipients who have very restricted capacity to repay.

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