Student concern over interest on loans proposal
NZPA
Student leaders are calling for common sense and a collective approach to funding the tertiary sector after an academic suggested the Government charge interest on student loans.
Otago University vice-chancellor Sir David Skegg said yesterday the Government should consider charging interest on student loans so it would have enough money to fund universities.
However, co-president of the New Zealand Union of Students' Associations (NZUSA) Sophia Blair said today the removal of interest on student loans in 2006 was the most significant and positive amendment to the scheme since its inception.
"This policy has made tertiary education more affordable, particularly for under-represented groups, and has reduced loan repayment times significantly, all of which are enormously beneficial to both students and the country."
The National-led Government reaffirmed its commitment to retaining interest-free student loans at the beginning of the year, she said.
"Times are tough and universities and polytechnics are under-funded, but revoking interest-free loans is not the answer to the problem.
"What we need is for Government to step up and fund the sector appropriately and for more creative and innovative discussion on addressing the needs of the sector, rather than short-term thinking of this kind," Ms Blair said.
Prof Skegg said universities were doing the best they could to increase income and balance the books.
"...perhaps a little bit of interest should be added to student loans... so the Government can fund universities more and we can keep our tuition fees down."
More than 530,000 university and polytechnic students have loans totalling about $10.2 billion and most students will take more than seven years to repay their loan.
Prof Skegg said the huge cost of student loans meant little money was available for other forms of tertiary funding.
Ms Blair said student debt was growing and would hit $20 billion by 2022.
"Adding interest on to student loans will further increase this burden on students and create long term consequences for New Zealand."
When interest was being charged on student loans throughout the 1990s, tertiary institutions opted to significantly increase tuition fees every year.
Suggestions that reinstating interest on loans now would somehow encourage universities to keep fees down were implausible, Ms Blair said.
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Yes I agree, Uni advertising is nto needed, but that is not the only waste these days. Massey's Schl of Eng & Adv Tech (SEAT.massey.ac.nz) now have their own 'Marketing Manager' too would you believe! Yet they don't resource the course properly. What a waste of student fees!!! Now Massey is laying off even more staff - redundancy time yet again.
There was a time when Universities didn't have to advertise. Now they do. That's got to be one of the reasons their costs are increasing.
Agreed, I'm overseas never coming back, I'm not paying back anything. The whole student loan scheme was and is one big fraud. The govt ripping off the people of new zealand to pay back debt accrued much earlier.
Well stuff that, you can keep my loan and the country. I'll find another place to settle pay taxes and raise a family where I can actually buy a house and have a life before I'm 40.
how about reducing the interest for those overseas? I'm not paying mine back at all, There's no incentive unless I wanted to come back to NZ to live which I don't.
As one of the baby boomers I take issue with several comments that it was easier for us to get a Tertiary Education. Rubbish. I came from an average earning family and there was no way I or my parents could afford the fees for me to go to University. If you look at those baby boomers who graduated you will probably find they were the sons and daughters of fairly well off parents or they worked until they had enough money to pay the fees and live before gettong their degrees. In fact I remember a lot of professional type jobs did not required degrees. e.g. Accountants, Pharmacists (these two professions were trained on the job). Teachers and Nurses were paid a small wage when training but had to sign contracts to stay in an area for five years. I myself did not go to University until Student Loans came out.
I work in a specialist area of Civil Engineering. There is a shortage, both in New Zealand and world wide, for what I do. My sector has a direct impact on the ability for major infrastructure works going ahead employing many people. One of the reasons that I stayed in New Zealand for the last 3 years (I finished University 8 years ago) was due to no interest on Student Loans if I stayed in the country. I have now payed off my loan because of this major improvement to the scheme.
I believe that putting interest on student loans for people remaining in New Zealand would play a role in keeping educated people leaving the country. Remember if I'm not in New Zealand paying tax then the loss to the government is much greater than the amount they would make through interest.
I was 18 when I took out my student loan in 1997 did I read the fine print? NO... but like thousands of others I wanted a higher education. I remember being able to draw down thousands of dollars with a phone call it was all too easy. Any way I completed my double degree in Law and Commerce and proceeded to pay back my huge student loan of over $40K with compounded interest. It is now 2009 I have almost paid back my loan . I now live overseas where I earn allot more. I am reluctantly making the last of my student loan repayments (I didn't really have too but - I am lucky to be in the situation where I can spare a few dollars - Trust me if I couldn't spare the money I would leave it until it was eventually written off along with the rest that Govt knows they will never be able to get back). If the NZ government had only forgiven my student debt for every year I remained in NZ I would still be a tax paying citizen. What other incentive does a bright young spark graduate have to stay in NZ?
Skeggs is sitting on a $65m personal fortune and the ODT reports Sir Professor Skegg was paid between $530,000 and $539,999 last year.
It is wrong to suggest that using interest generated from a loan taken to study will help fund universities. What Prof. Skegg needs to do at the University of Otago is cap student numbers with an entrance exam, cut back office numbers (there are a lot who do nothing at this institution) and throw out those who are failing creating a burden on the system. Then you will lift the reputation of the university, lift its academic ranking and increase productivity. Now you are not punishing those who are finanacially restricted but more intellectually impaired.
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That is the most ridiculous thing ive ever heard, charging interest on student loans!!!!!?????? Kids in a high paying job, will still be paying their 60,000 dollar loans until they are probably 50+, and if you add interest on that?? phwoar! thats stupid. It will probably put people off going to uni, hardly anyone can afford it enough as it is, plus our generation will just get dumber and dumber. People will opt for smaller dumber courses because they would never be able to afford paying off their loans.