Certain events in the student calendar are hard to ignore – think freshers, graduation and exam season. But there are others that bubble beneath the surface and pop up unexpectedly. One such event is the April Loan Drop.
What is April Loan Drop?
Every year, in the month of April, eligible UK students receive one-third of their annual maintenance loan payment in one lump sum. As you can imagine, this is a pretty big deal for students – with some receiving as much as £4,602 in a single drop. We’re here to tell you why it’s a big deal for student-facing brands, too.
Which students receive the April Loan Drop?
UK students are entitled to receive a student loan for their tuition fees, and a separate maintenance loan for their living expenses. While the first goes straight to a student’s university, the second lands directly in their bank account so they can spend it as they wish. The maintenance loan drops in three near-equal. In total, the government loans £20bn to around 1.5 million students per year.
Student loan uptake among UK students is high. Of those who are eligible, 94% of students take out a student loan.
Why is April Loan Drop such a big deal?
Loan drop is to students what payday is to professionals – except instead of arriving monthly or weekly, there are only three per year. For many young people, loan payments will be the first and biggest source of income they’ve ever had. Couple that with the fact that they’re only getting it three times a year, and you’ve got a crash course in budgeting.
This means that the loan drop is a key date in the student calendar – and April is the most important of all, as it has to last the longest. One in four students will wait until April Loan Drop to make big purchases, and they’ll earmark around 49% of their loan for essentials like rent, bills and groceries. The remainder is disposable income, to spend during spring, summer and beyond.
What do brands need to be aware of?
April Loan Drop is exciting for students – but budgeting for the next five months is a challenge in itself. For student-facing brands, this is a crucial time to make a first impression with a student discount that they can work into their budgets.
The maintenance loan is, for the majority of students, a primary source of income – but it’s not the only source. Work and family support are significant secondary income sources for some students. Remember, not everyone is in the same boat.
We’d also recommend checking out how students are planning to spend within your vertical this summer. COVID-19 and the ever-changing landscape it brings means that nobody knows what to expect – but as the vaccine rollout continues, the picture grows ever more hopeful for this cohort of students, many of whom started their degrees in lockdown. This summer could be one of exploration, excitement and the release of pent-up demand. As a brand, April loan drop is a perfect opportunity to put yourself on their radar.
So, how exactly are students planning to spend that loan? Download our guide to summer spending to find out.