Three universities have banned adverts from high-cost payday lenders after fresh fears were raised that unscrupulous firms are targeting hard-up students.

Northampton, Northumbria and Swansea have committed to never allowing payday lenders to advertise on their campuses and the National Union of Students is today launching a campaign to encourage more universities to join them.

“It’s clear that some payday lenders are targeting vulnerable students and the Government has so far failed to act so it’s important we do everything we can to limit their ability to reach our campuses,” said Pete Mercer, NUS national vice-president (welfare).

“Students are struggling to make ends meet and this is having a real impact on their well-being and their education.”

Payday lenders are currently under investigation by the Office of Fair Trading, which has proposed referring the sector to the Competition Commission, amid accusations of irresponsible lending and encouraging vulnerable people to take on expensive debt they’ll never be able to repay.

With interest rates quoted at more than 4,000 per cent APR, lenders have been accused of rolling over loans pushing people into a deadly spiral of debt.

MPs got into a row with the OFT last month by accusing the regulator of failing to control rogue payday lenders.

The Public Accounts Committee accused the watchdog of being “ineffective” and “timid”, and said it failed to identify risks of malpractice which have cost consumers at least £450m a year.

But the OFT hit back by pointing out that its powers to shut down rogue firms are limited. However its current probe into the sector has seen three of the country’s 50 largest lenders close for business and the OFT has written to the others to demand that they clean up their acts or face closure.

Research by the NUS has found that up to one in 10 students in vulnerable groups had resorted to using high-cost credit.

“Three times as many students with caring responsibilities use payday loans as other students,” said Mr Mercer.

The university bans follow last week’s U-turn by Bolton Wanderers which bowed to fan power by scrapping plans to feature payday lender Quick Quid as its shirt sponsor next season.

The move followed the lead of Sheffield Wednesday which refused to accept sponsorship from a payday lender, despite the firm offering 25 per cent more than usual to persuade the club to sign up.

Last week The Independent reported that unscrupulous lenders have been using religion to tempt borrowers with two firms claiming false links to religious institutions.

Paul Crayston, from the debt charity National Debtline, said using religion to prey on the vulnerable is “completely unacceptable”.

“If anyone is unsure that a lender they are considering borrowing from or have borrowed from is legitimate, they should seek free, impartial advice as soon as possible,” he advised.