Applications for no-interest loans are climbing as parents struggle to meet rising back-to-school costs

A banking specialist says applications for no-interest loans are soaring as families struggle to meet back-to-school expenses.

Claire Halliday
Claire Halliday

Australian parents desperate to cover back-to-school costs are applying for no-interest loans as financial pressures caused by the ongoing cost-of-living crisis continue to sting families.

NAB Head of Customer Vulnerability Mike Chambers describes the start of the school year as “stressful for some families”.

That stress will see, he says, will see NAB preparing for more than $640,000 to be taken out in loans in February 2024 alone. The number of people turning to the bank’s no-interest loans has grown 73 per cent since 2018 – a figure driven by the financial struggles of parents unable to meet the expense of school uniforms, textbooks, stationery supplies and technology – including iPads, laptops and expensive scientific calculators many secondary students need.

“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 says.

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“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.”

The trend aligns with research from a Finder survey of 1039 respondents showing almost one-third of Australian families can’t afford back-to-school essentials, such as uniforms, stationery and required technology.

Extrapolating those results to a national level reveals that would impact for 1.9 million households.

Partnership with not-for-profit supports low-income families

Since 2018, NAB has supported more than 22,692 Australians with $28 million in no-interest loans for school essentials. NAB offers these loans and other financial assistance to people on low incomes as part of an ongoing, 20-year partnership with Good Shepherd Australia New Zealand. The organisation is Australia’s oldest and longest-running not-for-profit (NFP) that specifically supports women, girls and families. Supporting the NFP’s no-interest loan scheme (NILS) aims to help Australians pay for household essentials, medical and education expenses with loans of up to $2,000.

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With 44 per cent of Australians admitting to experiencing some form of financial hardship in the second half of 2023, NAB says it is the only major bank offering a program that to help financially vulnerable Australians, or those on low incomes, access no-interest credit.

No-interest loan data from Good Shepherd shows:

  • 85 per cent of all no-interest loans were issued in NSW, Victoria and Queensland
  • 13.8 per cent of these loans were for education expenses
  • Demand for education expenses peaked in February and averaged $1,237 per loan.

“People facing the financial squeeze can panic and try quick fixes like pay day loans, but it’s crucial to know there are other forms of financial support available and places you can turn to for help,” Mr Chambers says.

Energy, grocery, petrol and education prices all soaring

Good Shepherd’s Executive General Manager of Client Services Dave Vicary says the NILS can help reduce the financial burden back-to-school costs place on household budgets that are already at breaking point.

“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 says.

Careful budgeting doesn’t make enough difference for many households

For NILS recipient, Belinda, trying to make back-to-school ends meet with two children at primary school and two at secondary school led her to apply for the no-interest loan that has helped her family fund the critical supplies her children needed to return to school for 2024.

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“My kids are at an age where they all need to bring their own device to school,” she says. “That wasn’t a requirement ten years ago.”

And despite careful budgeting throughout the year, Belinda says sending her children to school is it’s getting more expensive.

“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.”

While she says that costs “kind of fluctuate over the years”, this year they’ve been tough especially with the cost-of-living pressures affecting so many Australian families.

“Because I have a big family, I live at the supermarket and the cost of my food bill is off the charts. All the things we rely on, food, electricity, phones, and internet are through the roof,” she says, adding that, without the NILS support, her situation would be “dire”.

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“I don’t want my kids to miss out. That’s an emotional roller coaster on top of the financial roller coaster.”

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Claire Halliday has an extensive career as a full-time writer - across book publishing, copywriting, podcasting and feature journalism - for more than 25 years. She lives in Melbourne with children, two border collies and a grumpy Burmese cat. Contact: claire.halliday[at]