SA students are forming poor financial habits, putting them on course for falling into a debt spiral even before they graduate.
That is according to a new survey on the spending habits of students at the country’s institutions of higher learning. It revealed that 83% worry about money and 56% are using the next month’s income to pay for the current month’s expenses.
The report also shows that students are overspending by an average of R760 a month, suggesting personal finance courses may have to be added to the academic curriculum.
Varsity Vibe, SA’s first discount app offering exclusive deals to students at universities and colleges, conducted a survey of 5,854 students in December 2021 and found most are spending beyond their means. On average, students only have R4,527 in monthly income, 77% of which is provided by parents or family, yet on average they spend R5,287 a month, albeit mostly on accommodation and food.
“Based on our research survey, it’s clear to see that over 80% of our students worry about their financial situation. To make matters worse, they are overspending already from first year, creating a debt spiral early on,” said Dino Talotti, founder of Varsity Vibe. “Even more concerning is that one in three students do not have a monthly budget to follow.”
The turmoil caused by Covid-19 is still playing out across SA, with the nation’s unemployment rate steadily increasing since the pandemic began in early 2020 to an all-time high of 34.9% in the third quarter of 2021. The financial stress and the societal changes caused by the pandemic and subsequent lockdown restrictions, have exacted a nonfinancial cost as well.
Varsity Vibe’s data shows that 61% of the students surveyed reported that their mental health had suffered due to financial concerns while 52% said their diet had been adversely affected. While 33% of students reported having to work either full-time or part-time to fund their studies, no less than 30% said they were resorting to “hustling”, such as speculating on crypto assets, in order to make ends meet.
The report showed that students’ financial means differed according to their geographic location. Those based in the Western Cape and Gauteng had more money available on average while those from Limpopo, the Free State, the Eastern Cape and Mpumalanga had significantly less.
The Varsity Vibe report also revealed some unexpected positivity, with 73% of students saying they were confident of getting a job after graduation. An overwhelming 97% of respondents indicated that going to university was worth it.
The average salary students expected to earn upon graduation was R16,817. Those studying medical and health sciences saw earnings of 46% more while engineering students anticipated an 18% salary premium. Students studying law expected to earn 16% less than the average anticipated starting salary while commerce students expected 8% less.
“Law and commerce students become aware that their starting salaries are going to be a lot less due to articles,” the Varsity Vibes report said.
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