Student Account Ideas (Collaborative)


#1

I asked Monzo about what internal ideas they had about student accounts, and I received this reply: https://twitter.com/monzo/status/933799218896101377

Basically, nothing is yet planned. I looked around on the forum and found a few scattered threads, but they were mostly just really old and I didn’t fancy necro-bumping.

So, in this thread, I guess we collaboratively discuss what a potential Monzo student account would look like.

My ideas are:

  • Strong money-saving features. It’s a student’s biggest concern and Monzo really has the potential to excel here.
  • Interest-free overdrafts are pretty standard, and it would be hard to convince a student that they won’t need it. They do.
  • Using AI to detect when problems arise and step in if needed, although this would probably be a great idea for everyone, not just students.

Post your own thoughts below.


Student Bank accounts
Student Bank accounts
(Allie) #2

Generally, I’m opposed to encouraging debt in young adulthood by offering any kind of overdraft, but it’s also a very in-demand feature. Perhaps this could be handled creatively to discourage actual use, but have it for true emergencies. And emphasise the emergency nature of it, through naming/etc. A place for some creativity.

Strong money-saving features and AI are great also. Perhaps notifications at places that offer NUS/UniDays/etc discounts to remind students of these discounts?


(Anthony) #3

Hi! I studied as an international student here for two years and am now living here. I’ve always had a regular bank account; apart from overdrafts (which can indeed encourage overspending on nonessentials), what’s missing from the current account that students need?


(Kevyn) #4

That is a massive loss leader for big banks in the hope they will retain your business and bleed you dry later. I’m sure someone from Monzo (but I could be wrong) commented that they couldn’t compete with big banks on this point right now.


(Hugh) #5

I’m a student. I don’t have an overdraft. I know lots of other students and most don’t have overdrafts, the one person I know that uses their interest free OD withdrew the £2k and has put it in a savings account.

Students don’t need big, free overdrafts.


#6

Ah well I guess if we’re sharing anecdotes then I might as well join in.

I’ll be £80k in debt at the end of my degree, not even including interest. The way that the maintenance loan is paid out doesn’t align very well with day to day spending and rent. Without my overdraft, I wouldn’t have a buffer or any flexibility, and I would have either been kicked out of my accommodation, or not have had any money for food.

My HSBC overdraft gives me “free” money, as you call it, which is subsequently and automatically paid off as soon as the next installment of my student loan comes in.

Understood and agreed, but honestly, having a safety buffer and using it responsibly is really quite negligible when compared with the huge debt students will have anyways.

It’s just one less thing to worry about.


#7

There is a key difference between student loan debt and actual debt though. The second is much more serious.


#8
  1. The difference being?
  2. OHH so my huge student debt is not “actual” debt. Good to know, that’s a huge relief.
  3. More serious? How is an interest-free loan that’s paid off quickly, doesn’t last for decades, and is around 80x smaller, more serious than an overdraft?

#9

Student loan debt does not sit on your credit report, no matter how long you leave it and how much interest it gains. It does not affect anything in your life, other than an amount coming off your pay cheque once you earn enough. Common advice is simply to leave it, as most are unlikely to be able to pay it back before the date it is written off anyway.

If you get a job because of it it pretty much acts as an additional tax, rather than a realistic figure you will pay back. The obvious exception to this is is you get into a high enough paying position quickly, but that is the minority.

Like all of us that went to uni it was a known cost before you went. I don’t think it should cost this much, but if I had really protested it I would simple have studied in mainland Europe.

The key difference is that many don’t treat an overdraft this way - I know far too many people who were still in it when their student status ran out, and the interest-free nature evaporated. I would also dispute that it is paid off quickly - when I graduated there were 80 graduates per graduate level position, and I think that has only gotten worse since then.

Without more serious financial education at the high school level overdrafts and 0% cards are a recipe for disaster, or at least medium term consequences.

They are appropriate for some, but not a tool I advocate as being advised for all.


#10

Alright, so if I’m understanding you correctly, your argument is that a subset of the people that use overdrafts use them irresponsibly, and therefore Monzo should not offer them.

There’s two things here. Firstly, we’re kind of ignoring how useful they are. That is objectively true, maybe not for everyone, but for a lot of people they are invaluable.

Regarding the people that abuse them, they have a multitude of legacy banks to choose from if they still want an overdraft to abuse. I would much rather Monzo offered it smartly, stepping in when things start to go wrong, offering advice and support, rather than some legacy bank exploiting the inexperience of young people.


(MikeF) #11

“How useful they are” is surely the honey in the trap? People start get into trouble at the point that they can’t pay the overdraft off in full every month and it begins to grow. I’m not sure what a bank can do to help under these circumstances?

I’ve learned an awful lot about student finance in the last six months, largely because I have a daughter in year 12 so we’re looking at the future.

Student debt (i.e. fees and loan debt) is unlike anything else and is really just an excuse for (effectively) enhanced taxation in later life. I don’t approve of it or agree with it but one of the biggest crimes is calling it a loan since it encourages people to imagine that all loans work in this very peculiar way. Call it anything, but don’t call it a loan.


(Hugh) #12

For all intents and purposes it is a grant. Isn’t it on average 3/4 of the “loan” is never repaid?


(MikeF) #13

I guess a grant combined with a 30 year additional income tax responsibility would be a suitable description.


(Allie) #14

Exactly, it’s a very special type of loan. A loan most people never have to pay off, and not paying off doesn’t harm them. A loan you only have to pay off if the product bought with it (your education) was worth it (got you a job earning enough to pay it off). It’s dangerous for people to learn early on that’s what a loan is.


(Eve) #15

I’m not given an overdraft with my international student account, but I think an interest-free overdraft would be essential for most students. Going into anecdotes, some of my uni mates only survived because they had overdrafts to pay rent/bills etc. I don’t think it’ll be possible to regulate who really needs it and who blows it on drinks/ clothes/ etc. A few of them have told me that they’ve spent it very quickly in first year because they had never had that much money at one go but learnt their lesson after.

I think the spending tab with targets will help them manage what they spend, and a certain amount can be placed in pots to be saved (or auto-transferred into a savings account). They still need enough self-discipline to not go over target/ spend all the money in a specified pot though.


#16

Well sure, for some people. That is until you haven’t got enough money to both pay rent and buy food and your next student loan payment comes in after 2 months.

Then, it’s absolutely essential. And a fee in that case is just impossible.


(Andre Borie) #17

But wouldn’t Monzo be able to actually tell more or less what you’re spending it on? They know which merchant you’re spending at for example.

Sure there will be loopholes (someone who truly wants to abuse it will always find a way) but I can see them for example offering overdrafts that would take in a direct debit for energy or similar but would decline that huge purchase at the Supreme store last Wednesday or similar, to discourage compulsive (ie dangerous) purchases.

Hell I’m not a student and have a decent salary and yet would still be grateful for such a feature - otherwise I blow my salary in a few days on unnecessary shit (the new MacBook I’m holding right now proves it). :joy:


(Brandon Billingham) #18

I remember I only got 70% of the loan as it was means tested. This never made sense to me, I understood why you’d means test the grant but not the loan. Regardless, 70% is what I got because the household I lived in earned above the threshold, the person earning the money though wasn’t related to me.

It meant that each term I had very little to live on, so I got a job to supliment and even then I still needed the overdraft. The biggest shock was in final year when I didn’t have a job. The final loan payment was smaller than expected because apparently previous payments in April accounted for the summer and in final year there are no summer months!

I don’t see why people don’t want to call it a loan, it’s exaxtly what it is. An agreement to pay back money with interest. Just because the terms of the repayment are different to loans from a bank doesn’t make it any less of a loan.


(MikeF) #19

The aversion to calling it a loan is exactly because it’s not an agreement to pay back money with interest. I know government are discussing changing the rules to ensure they get all the money back and at that point, I agree that it will become an actual loan.

At the moment it’s simply an agreement to pay additional tax for 30 years (if you earn enough). Yes, paying off the ‘full amount’ will end the extra tax payments early but the interest rate is set to make that pretty unlikely to happen.

I think I’d summarise the ‘not a loan’ view by saying that a loan needs to be paid in full and this doesn’t.


(Brandon Billingham) #20

Is the 30 years aspect just not considered Loan forgiveness?

Feels like a loan to me. I borrow a some of money, I agree to pay it back over a length of time based on the arrangements of the contract I signed, that contract tells me how much I need to pay back, when I need to pay it and what the interest rate will be. Part of that contract stipulates the loan will be forgiven after a certain length of time has passed.

It’s not a loan that a bank is going to give you, but it’s a loan none the less.