It has been revealed struggling students on Scottish campuses are being increasingly targeted by loan sharks as bank credit dries up.

The National Union of Students in Scotland is receiving reports that unprincipled lenders are gaining a foothold across the country. Loan shark lending has become easier as the recession hits and university hardship funds are running out.

NUS Scotland president Gurjit Singh said: "We are very concerned by a number of reports of students turning to unreputable lenders for credit. Interest payments on these kinds of loans can very quickly become a problem for those with little or no income. We advise avoiding this kind of credit.”

A student finance insider revealed: “We know people have got themselves in real bother with 40 per cent interest-rate loans [...] Debt collectors have been saying students have been advised to go to them because the colleges and universities can't help them.”

Susan McPhee, Citizen Advice Service director of social policy, warned students about loan sharks: “Deals that offer ready cash can seem irresistible, but debt can become unmanageable all too easily, because of interest rate changes and hidden charges and default charges.”