Students advised to be careful about debt

The rising cost of borrowing via credit cards and personal loans could cause student debt to spiral out of control, a union representative warns.

David Malcolm, Head of Social Policy at the National Union of Students, advised students to be very careful about the amount of borrowing they take on.

He added that if students did find themselves in trouble with debt then they should seek help from university debt advisors as soon as possible.

While the UK student loans market has not yet been affected by the credit crunch, Citigroup has pulled out of the loans market in the US.

Mr Malcolm said: 'A lot of students do rely on [credit cards], whether they should or not is another matter but they do.'

'It's something to be careful about and make sure they do not … get themselves into debt,' he added.

He described a traffic-light system for debts: green referred to low-interest student finance; amber to credit cards, which should be used only when necessary; and red to store cards and personal loans with high rates of interest.