Student loans are getting bigger and harder to pay off, new figures show

Josh Clifford has been paying his student loan back from Australia, but says he's struggling to make a dent in the ...
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Josh Clifford has been paying his student loan back from Australia, but says he's struggling to make a dent in the principal due to interest.

Student loans are getting bigger and graduates are taking longer to pay back the money they owe.

Figures from last year's Student Loan Scheme Annual Report show the median loan balance in this country grew from $10,833 in 2008 to $14,904 in 2016.

The median repayment time for someone with a bachelor's degree also lifted from just over six years, to eight and a half.

The Student Loan Scheme Annual Report for 2016 shows the size of loans continues to increase.
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The Student Loan Scheme Annual Report for 2016 shows the size of loans continues to increase.

Since a peak in 2005, the numbers of people taking up tertiary education have declined.

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New Zealand Union of Students' Associations Jonathan Gee said students were worried they were not going to be able to pay back the loans they were accruing.

Labour education spokesman Chris Hipkins says student debt is making it harder for the next generation to get ahead.
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Labour education spokesman Chris Hipkins says student debt is making it harder for the next generation to get ahead.

University fees and the cost of living had gone up, meaning students had to borrow as much as they could to get by.

"What you see is the repayment times are going up and that's in part a result of incomes becoming stagnant, in my opinion. The fact we might get higher incomes after we get our degree is not the reality students have."

Josh Clifford studied for four years at Wellington's Victoria University, racking up a bill of $62,000 while he studied political science and international relations. The 35-year-old moved to Sydney before he finished his degree.

It was meant to be a working holiday, but he met the woman who is now his wife, and ten years later the couple was based in Sydney.

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"I really do want to pay if off, but ... I've got a young kid, and a mortgage, and just got a car loan. It's a balancing act at the moment, it really is."

Due to interest, Clifford was struggling to make a dent in the principal loan.

He believed anyone who borrowed money should pay it back, but there was not always a job in New Zealand for everyone who had graduated with a degree.

"People sort of have to go abroad ... who are trying to begin their career in a field they've studied for. There are those who want to begin their career quickly, but they're are not always able to do so within New Zealand."

Labour education spokesman Chris Hipkins said there was a variety of factors that lead to higher student loans and longer repayment times. Tuition fees continued to rise, as did living costs.

"The long term impact for people is quite significant, basically they have a large debt for longer," Hipkins said.

"If they're weighed down with student loan debt it will be difficult to get on the property ladder, it's already a burden, and this is making it even harder for the next generation."

Universities New Zealand executive director Chris Whelan said that when it came to universities fees increasing, one need only look at published annual accounts of the country's eight universities to see they were not "raking in" a lot of money.

Currently two-thirds of the cost of tuition was covered by subsidies, and one-third was covered by the student. Analysis of the 2013 census showed the typical graduate was better off for having studied at tertiary level.

Tertiary Education, Skills and Employment Minister Paul Goldsmith said the decline in the number of people participating in tertiary education was largely due to the strengthening of the economy and labour market.

More Kiwis were going to straight to work than tertiary-level study.

In 2000, the average student paid 33 per cent of the cost of their education, in 2015, that had decreased to 29 per cent.

"There is no evidence to suggest that lower tertiary education participation rates are linked to the higher costs of tertiary study, and higher living costs," Goldsmith said.

LOANS ON THE RISE

Median loan balances

2010 - $11,399

2012 - $12,849

2014 - $13,882

2016 - $14,904

Median repayment times for a bachelors/graduate certificates or diplomas

2010 - 6.9 years

2012 - 7.8 years

2014 - 8.5 years

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 - Stuff

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