The number of people taking out pay day loans and loan debt management plans has grown alarmingly over the course of the past couple of years or so, yet both these areas of finance have very little, or no regulation to control them.

A new report, published today (Wednesday 7th March) by the all party commons select committee for business, has warned that the existing regulation and trade body guidelines on pay day loans and debt management companies are insufficient and the government should introduce statutory regulations to control these areas of the loan industry.

The enquiry follows a number of calls from consumer groups and loan debt charities to introduce regulation for pay day loans, in order to stop them being sold to vulnerable people who are unable to get a loan elsewhere and are unlikely to be able to afford the repayments in such a loan.

The committee has also suggested that any regulation should place restrictions on how many times a borrower can ”roll over” a pay day loan into a new similar loan.

One MP said that at a time when pay day loan and debt management companies are seeing huge growth, the industry was still “opaque and poorly regulated” and that the government should have acted much sooner on ways to protect vulnerable borrowers.

However, the government is concerned that regulating pay day loans could deny many people the access they required to a loan and this could push them into the clutches of illegal loan sharks for their credit needs.

Some of the suggestions in the report include replacing the APR (Annualised Percentage Rate) figure on a loan quote, with a figure showing the total cost of the loan, as well as introducing higher licencing fees for firms and a faster process for the Office of Fair Trading to suspend licences.

It has become a well publicised fact that a growing number of individuals across the UK are facing increasing debt problems through personal loans and credit card debts, but the scale of this is perhaps not fully appreciated.

A new survey conducted by the Co Operative Bank has estimated that somewhere in the region of 70 per cent of the adult population in the country have admitted that they have a problem with loan and credit card debts, although around a third of individuals will not tackle their loan debt problems, often until it is too late.

The survey found that the average person does not believe that they have a problem with debt, until their borrowings reach a level of at least £1,247 on overdrafts, unsecured loans and credit cards.

Those people who are burying their heads in the sand over their loan debts have been described by the Co Op as suffering from the “DRIP syndrome” whereby individuals:

Deny that they have loan debts

Rationalise the reasons for their loan debts

Ignore the fact that they are in loan or card debt

Postpone doing anything about sorting their loans and card debts out

Almost a quarter of those interviewed said that they had had unsecured loan debts for at least five years, one in twenty said that they had pay day loan debts and one I eight people said that they gambled, or bought Lottery tickets as a realistic solution to their loan debt problems.

The survey has also discovered that around half the population of the UK have increased their overall debt level on loans and cards within the last twelve months and that the average person with loan an card debts has accrued an additional £325 worth of debt since Christmas alone.

New students who are applying to start at university this year have a lot more to think about than just which university they should attend and getting the necessary A level grades to achieve their first choice.

From this year, tuition fees have shot up to a maximum amount of £9,000 per year with many universities and at the same time, the student loan system has been overhauled to deal with this huge increase in loan debt which many students will inevitably face.

Although students graduating from university in the future are likely to face much higher levels of student loan and even personal loan debt than those graduating today, the changes to the student loan system means that they will not have to start repaying their loans until they begin to earn at least £21,000 per year.

Once a graduate reaches the salary target of £21,000, in today’s money, they will then start to repay their student loans at a rate of 9 per cent of their earnings, with higher earners paying more on their loans.

As a part of the review of the student loan system, the government had originally proposed that penalties should be applied to any overpayments on student loans in excess of the standard amounts, at a rate of 5 per cent of the loan overpayment.

However, after much pressure from student and consumer groups, the early loan repayment penalty has now been dropped and graduates will be able to repay as much of their student loan as they wish, without penalty.

Whether anyone would be best advised to make overpayments on their student loan is another matter though, due to the fact that if the loan debt has not been fully repaid after 30 years, the remaining balance is written off and with the high levels of loan debt faced by many and the poor job prospects on offer at the moment, this could be a likely scenario for many.

Credit cards were once considered to be the easy way of obtaining credit for many people in the UK, with the result of many individuals building up large balances on a number of cards, which they would eventually clear by taking out a debt consolidation loan.

However, a new report from the accountancy firm PricewaterhoouseCooper has shown that households across the UK paid off significant amounts of unsecured loans and credit card debt over the course of last year, although the average household was still left with around £7,900 worth of loans and card debt.

The report also highlighted that more and more people are turning away from using their credit cards, with both the total number of cards and the outstanding balances on these, both falling throughout the last twelve months.

More people are now using debit cards, rather than credit cards or personal loans and younger people in particular are using digital payment methods, such as via their mobile phone.

However, what seems to be more alarming is the fact that many individuals who previously used credit cards or unsecured loan from their bank, are now turning to expensive pay day loans as an alternative method of borrowing money.

One reason for the huge growth in pay day loans could be due to the fact that the majority of credit card and unsecured loan providers have tightened their lending criteria since the credit crunch and banking crisis, which has caused many borrowers to be rejected for the loan they want by a traditional lender.

Neil Blake of Ernst & Young said “Households that fall outside of the credit terms of traditional lenders are increasingly looking towards other credit and loan providers, regardless of the cost. With banks expected to further tighten lending conditions, we expect the shift towards alternative lenders to continue unabated.”

Over the course of the past few years, the number of young people going to university has steadily increased, despite the cost of tuition fees and living costs and the need for the majority of students to rely on a student loan to help fund their education.

Although these days it has become almost essential to have a degree in order to get a good job with a decent salary, the cost of a university education and the huge amount of loan debt which graduates are often left with afterwards, has put a growing number off the idea of further education.

The latest figures from UCAS, the university admissions body, have shown that the number of students applying to university has fallen by 7.4 per cent this year, compared with the same period last year, with the overall cost and eventual loan debt being one of the biggest reasons for not going to university.

University tuition fees are increasing from September this year, from a maximum of £3,375 for the current year, to a possible maximum of £9,000 and although these fees are not payable at the outset of the course, the cost is all added to the total student loan debt which will eventually need repaying.

Whilst many students still see the value in a university degree for their future career, others who were unsure about whether or not they really wanted a university education may have been put off by the total cost and likely long term loan debt they will face afterwards.

Even though student loan debts are not started to be paid off until the graduate is earning more than £25,000 under the new rules, the thought of at least £27,000 worth of loan debt for tuition fees alone could be more than many potential students are willing to accept.