Students are increasingly relying on payday lenders as a way of plugging holes in their finances, the chief financial ombudsman has told MPs.
Caroline Wayman, chief executive and chief ombudsman at the Financial Ombudsman Service (FOS), told the Treasury Committee that payday lending has become "pretty prevalent in the student community".
She said: "One of the things about payday lending that we've learnt over time is that, actually, all sorts of people are taking payday loans now.
"One of the things that's come to our attention more recently is that actually it's pretty prevalent in the student community so a lot of the student unions are quite worried actually about the number of people who are now relying on payday loans to supplement their income."
The payday industry is undergoing a huge clampdown after coming under the oversight of City regulator the Financial Conduct Authority (FCA) in April.
Despite this, the FOS has seen rising numbers of complaints about payday firms. It now deals with around 70 cases a month, although consumers are often reluctant to come forward because they do not want to admit they are struggling.
Ms Wayman described the payday industry as an "evolving" and "innovative" market.
She said there is a consumer need for short-term loans and it can be a mistake to "think that we must close down payday lenders and that will solve the problem".
"Actually, people have a fundamental need, and a lot of the people that call us are really struggling," she said. "Most definitely it feels like very tough times out there for people and their needs are very immediate."
Asked why people use payday loans, Ms Wayman said: "We have been struck by the breadth of different backgrounds of people taking payday loans. Students was one particular group which perhaps people would naturally associate with payday lending, but there is a growing prevalence among students."
Ms Wayman said people do not like to talk about debt generally.
She contrasted the situation with the payment protection insurance (PPI) scandal, where "people think 'Oh, yes, I think the ombudsman can help me with that...'
"Whereas payday lending, I actually think our caseload is probably disproportionately lower than it should be ... compared to the scale of detriment...
"I do think it's our duty to try to reach people who do have these issues."
Ms Wayman said the ombudsman service is talking to organisations about how it can promote some of its messages through student unions, so that people realise they can contact the service for help and
"they're not going to tell my parents".
Read more about payday loans on AOL Money
Number of people with payday loan debt problems soars 42%
How to keep out of the clutches of rip-off payday loans