Banks are reassessing their strategies to win customers not just for asemester but for life, reports Laura Slattery. "We make sure students know that if they don't handle their loan properly, they can get a bad credit rating".
Next Wednesday, more than 56,000 students will receive their Leaving Cert results. A week later, many will be offered places on third-level courses by the CAO. At the same time, they will become official targets for banks campaigning to recruit future valuable customers.
"The banks have created a culture over the last few years where they've been giving out huge freebies, basically trying to bribe students into opening an account," says Mr Patrick Farrell, marketing manager for customer recruitment at Bank of Ireland.
But the banks want customers for life, not just for the first few days of the semester.
"Students will typically open an account with more than one bank, but stick with the one that offers the most suitable financial products as opposed to the one that's giving them the free CD," Mr Farrell says. This year, students who want to test drive their new stereo system will have to look elsewhere; there is no free CD when you open a Bank of Ireland student account, he says.
It's out with the freebies, in with the "value-added incentives", including a €30 voucher for Raleigh bikes, a 20 per cent discount voucher for Champion Sports and special travel deals with Sayit Travel. But the focus of the marketing campaign is the package of initiatives that claims to offer students access to interest-free finance at key times.
The package includes offering students their grant money in advance as an interest-free overdraft. If students take longer than nine months to repay the overdraft, however, interest will kick-in.
With the grant advance, Bank of Ireland has identified a common budgeting problem faced by students who receive confirmation from their local authority that they are eligible for a grant but are still waiting for the cheque half way through the semester.
"You could go eight weeks into the term and then receive a big cheque when there's only four weeks left to go, so students are not really sure how to plan ahead," explains Mr Séamus Ó Maonaigh, welfare officer for the students' union at UCD. Delays to the timetable cause further hardship, he says.
"If the grant is supposed to be in on the fifth of the month but it doesn't come in until the 17th, that's 12 days of financial difficulty students have to face. It's 12 days of not being able to buy textbooks, so their academic work is sliding, and 12 days of not being able to pay for their accommodation, so they risk being kicked out," Mr Ó Maonaigh says.
Banks also target students who are keen to broaden their horizons during the summer months, but know they need to work as many hours as possible in order to finance the next nine months of study.
After all, washing dishes in San Francisco can seem like a far more attractive and rewarding a proposition than doing the same within a two-mile radius of the college campus.
Students applying for J1 work-and-travel visas to the US can avail of interest-free loans. At AIB, the loan for the J1 programme fee - flights, an advice service and first-night accommodation - is interest-free until the June of the following year and subject to a maximum of €1,000. At Bank of Ireland, students can borrow up to €2,000 for the programme fee and set-up costs, with no interest charged if the loan is repaid within nine months.
Both banks have teamed up with European Student Services, which organises tax refunds for students who have worked abroad. Returning students can find out for free how much money they are entitled to, but the actual service will cost 10 per cent of the refund that the service recovers.
Normally the refund will arrive 12 to 16 weeks after the end of the tax year, but the banks' partnership with the European Student Services means students can receive the amount of tax due in advance in the form of an interest-free loan.
At Bank of Ireland, interest becomes due if the loan is not repaid within six months.
Sometimes, it doesn't matter how many interest-free products or free CDs banks throw in the path of students. Many, influenced by their parents, have already decided on their bank of choice before the first day of orientation arrives.
Alongside Bank of Ireland and AIB, Ulster Bank and National Irish Bank also offer transaction-free banking and preferential loan rates to students, but 85 per cent of students are customers of the two main banks.
AIB has yet to announce this year's incentive package for student accounts but will promote strongly its new mobile top-up service, available through AIB phone and internet banking from September.
According to Mr Farrell at Bank of Ireland, 85 per cent of students already have a bank account by the time they start college, a fact that results in strong recruitment drives at second-level. This means that branch presence on campus is not seen as a recruitment vehicle, though it is commercially important.
"Obviously, location is important for any business. If it's easy for students to open their account and pay their bills at the bank on campus, then they will," says Ms Caroline Gleeson of AIB's student banking department.
AIB has on-campus banking at more than 30 colleges around the State, including sole presence at UCD and DCU.
However, Mr Farrell believes a financially sophisticated generation of students is now shopping around more. "Students came into the bank 10 years ago hoping they would be able to get a loan, now they are asking: 'I need €1,000, what can you give me?'" Some 18 per cent will borrow from a bank, according to Bank of Ireland's latest figures.
The majority of students will turn to either part-time jobs or their parents or both to finance accommodation and living expenses. Loans and overdrafts are a third option, and both AIB and Bank of Ireland offer a 1.5 per cent discount for students on the personal loan standard variable rate.
Extra emphasis is given to certain terms and conditions for student lending, explains Mr Farrell.
"We make sure students know that if they don't handle their loan properly, they can get a bad credit rating, and that can affect their ability to get a mortgage or a car loan later on in life."
However, he believes students are "probably more aware of handling money responsibly than the average customer" - perhaps because many are used to making a little go a long way.
A certain percentage of students may also have higher expectations of what their standard of living should be. "The old cliché of beans on toast and tears in the jeans - in my experience, that's gone," says Mr Farrell.
But it is the basic cost of learning that puts pressure on most, and not everyone is quite as happy as the banks that so many students find themselves in urgent need of funds to continue with their education.
"Day-in, day-out, student advisers around the State have people approaching them who are in financial difficulty," says Mr Colm Jordan, president of the Union of Students of Ireland.
Students have been lucky in some of the packages the banks have offered, he says, but loans are no substitute for State support.
"Sometimes people do go to banks for loans and overdrafts, but I think it's sad that people who go to college to better themselves, contribute something to society and eventually pay higher taxes are forced to go to commercial institutions for help," he says.
For its part, Bank of Ireland has decided that honesty is the best policy when it comes to recruiting students. So the bank's college banking brochure asks the question "why do we offer students so much?"
The answer: "Because when you start making it, we do too."
The Irish Times will publish College 2002 on Wednesday, August 14th, to coincide with the release of the Leaving Cert results. It considers all the choices available to students who will be armed with their results.
On Tuesday, August 20th, The Irish Times will publishCollege Options 2002, which coincides with the release of the first round of CAO offers.
A further supplement coinciding with the second round of CAO offers - Second Round Offers - will be published on Tuesday, September 3rd.
