More Australian parents than ever are taking up no interest loans to cover back-to-school expenses as the cost of living crisis continues.
NAB is preparing for more than $640,000 to be taken out by parents to cover uniforms, books, stationery and computers for their children to return to school in February alone.
The number of people turning to the scheme has increased by 73 per cent in the past five years and the bank says the figures have doubled since the Covid-19 pandemic.
NAB is predicting parents will take out an average of $1237 per loan.
The start of the school year can be a stressful time for families financially according to NAB head of customer Vulnerability Mike Chambers.
“The start of the year is often when the full impact of festive spending hits just as families are facing new costs and long lists of back-to-school expenses they quickly have to meet,” Mr Chambers said.
“With the cost of living continuing to rise, we expect to see more families on low incomes turn to a no interest loan to help them manage higher back-to-school costs.”
NAB partnered with Good Shepherd in 2018 to offer the no interest loans to parents who would otherwise be unable to afford their children’s expenses each year.
The program has supported more than 22,700 Australians who have taken out $28 million in loans for school essentials since it began.
Belinda, who has two children in primary school and two in high school, described the loan as a “godsend” for her family.
“It has become so hard at the end of the year, just before Christmas when the schools release the uniform, book lists and now technology requirements and I think how on earth are we going to pay for this?” she said.
“I’m good with it all [budgeting]. I start doing things for the kids during the year to prepare and help cover the costs. I look at second hand uniform options, what I can recycle from one child to another, but sometimes they need it new, and it all still overwhelms me.”
Good Shepherd executive general manager Dave Vicary urged families to consider no interest loans in lieu of turning to payday loans that attract high interest rates.
“With higher petrol prices, grocery bills and energy costs, Australians are facing a tougher time to also get their kids ready for the 2024 school year,” Mr Vicary said.