Are Students Using Their Loans To Gamble?
For as long as the student loan system has existed, there have been people who think that those studying at universities and colleges are using them incorrectly. If all students were honest about how their loans get spent, the likes of alcohol and take-away foods would be high on the list. For some, that is not what student loans are there for, with the money actually meant for the cost of studying and paying for accommodation. Of course, it doesn’t really matter how student choose to spend their money, but it could become a problem.
Student loans are essentially a form of credit, which means that those using money from their loan to place bets with bookmakers and online casinos are actually breaking the rules. Gambling companies are not allowed to accept credit cards for bets and wagers, so there is an argument that they shouldn’t allow the use of borrowed money for the same sort of reasons. Of course, students don’t take out a loan with the specific aim of using the money for the purposes of placing a bet or two, which is what makes the entire thing that little bit more complicated.
What The Rules Say
The United Kingdom Gambling Commission is extremely clear when it comes to people betting with credit cards. Whether it be online betting with a casino, sportsbook or bingo or inside an actual betting shop, credit cards cannot be accepted as a form of payment for any form of gambling apart from the National Lottery. The lottery and its associated scratch cards is only given a pass on account of the fact that the UKGC feels as though it would be difficult for retailers to separate lottery purchases from people doing their big shop in a supermarket, for example.
The Gambling Commission’s rulings on the matter extends to e-wallet usage, with companies accepting e-wallets told that they need to make sure that the money added to them has not been put there with a credit card. In other words, the use of credit for gambling is a big no-no, unless it’s on the purchase of lottery goods. Whilst student loans are not actually credit in the same way as literal credit cards are, they are still a form of borrowing that you agree to pay back over time at the moment that you agree to take them on.
The government says about student loans,
“Student loans are different from other types of borrowing because they do not appear on your credit file and your credit rating is not affected. However, if you apply for a mortgage, lenders may consider if you have a student loan when deciding how much you can borrow.”
So it is not credit in a way that would show up when your personal financial situation is being looked at, but it is a form of credit in its own right. This is what makes the use of a student loan to gamble quite complicated.
How Prevalent Is It?
Recent research by the Young Gamers and Gamblers Education Trust into the matter shows that as many as 35% of students had used money from either their student loan or their bank overdraft in order to place bets. With 19% of respondents specifically having used their student loan to gamble, it is fair to say that it is a slightly problematic issue. The key findings from the study discovered that those that did gamble spent an average of £31.52 per week, with 18% of students admitting that they spent as much as £50 per week.
Of the students that chose to gamble, 38% of them did so once a week or more, whilst 63% gambled at least once every month. The key thing that the survey doesn’t draw attention to is that 32% of their gambling was on National Lottery products. Whilst that isn’t all that much better than other forms of gambling, buying a lottery ticket once a week is obviously significantly better than ploughing hundreds of pounds into playing online casino games or regularly spending big money on bingo. Incidentally, 25% of bettors said that used the sportsbook and 18% were fans of online bingo.
With 264,000 students being at risk of gambling-related-harm, it’s little wonder that certain quarters are asking questions about students being able to use their loan to gamble. Lewis’s first experience of gambling came when he was 16 and selected 12 teams on his dad’s betting account, winning £64,000. Within years, all of that money as well as his student loan had gone on gambling, resulting in him dropping out within three months of starting his degree. It was part of a damaging journey, which included him taking out payday loans to cover his debts.
Is It Right?
We know that credit cards have been banned as a way of placing bets since April 2020, but overdrafts, payday loans and student loans are all acceptable sources of income for betting. Is it right that a student can take out tens of thousands of pounds of debt and use that money for purposes other than paying their rent and their college or university fees? With one in five using student loan money for gambling, it is not unreasonable to question whether the Gambling Commission has missed a trick in not banning such a payment method for gambling.
Students need money. That is a fact that, mostly, cannot be argued with. Around 46% of students admitted that they gambled in order to make money, but 52% of them said that it excited them. On top of that, those students that gambled were more likely to buy crypto-currency, which is also a risky way of spending money. The problem is, how do gambling companies ensure that money, which effectively just enters someone’s current account, isn’t borrowed money? There is no easy way to do it, which is why it is likely to continue for the foreseeable future.
