Winston Peters promises to wipe student loans
New Zealand First is promising to wipe student loans for new students who stay and work in the country for five years, and it says that it will only cost $4.6b a year.
People who bond themselves to regions in need of workers or study for less time could wipe theirs even faster.
The "Up Front Investment" announcement was made at the party's regional conference this weekend, along with the promise of a universal student allowance, instead of the means tested benefit currently in place.
"We are going to deal to student debt because it's getting worse and worse. It's just impossible for young people," party leader Winston Peters said.
Under the proposed scheme, the universal student allowance of about $200 a week would cover living costs while the government would cover all of student's tuition fees upfront.
The Government currently subsidises around two thirds of tuition fees for domestic students.
Every year of study would bond a student to one year of work in New Zealand. So a student who completed a three-year BA would only need to work for three years in New Zealand to pay off their entire loan.
However these fully-funded places would not be guaranteed, with industry groups and a reinstated Careers NZ setting a number of jobs they would need when the degree ended. There would be competition for fully funded places, but also safeguards to preserve diversity.
Students who studied for longer than five years, like doctors, could still have their fees wiped in five years or less.
The policy would only apply to new students. If a student left the country within their repayment period and did not find a overseas worker to replace them then they would be hit with the remaining years of their loan. Like current overseas based borrowers this would be with interest, but it would also be the full tuition fee, not a subsidised one.
"Whatever you've got left will be turned into a financial debt - actually more. It will be the full fee," New Zealand First education spokesperson Tracey Martin said.
"The loan will be around time rather than money. The government would directly negotiate and directly purchase the fully funded places from universities, PTEs, and polytechs.
"We don't think you should have to borrow to live."
Martin said the scheme would cost $4.63b a year - only about half a billion more than the Government currently spends and 1.86 per cent of GDP - but both Labour and National said it was fiscally unachievable.
"I have no philosophical objection whatsoever. Our goal over the long term is certainly to get back to a free public education system," Labour's education spokesperson Chris Hipkins said.
"However, we will be implementing politics that we know the country can afford."
Tertiary Education Minister Paul Goldsmith had similar misgivings - and didn't trust the NZ First costings.
"The universal student allowance alone could cost an additional billion dollars per year," Goldsmith said.
"Our approach is to provide most students with interest-free student loans to contribute to their living costs, and to target student allowances only to those most in need.
"We know that graduates go on to earn around 40 per cent above the median income and that the median repayment time for New Zealand-based students is just under 6.5 years.
"Over 490,000 New Zealanders have gone out into the workforce and fully repaid their loans – to move the bar like this just seems inherently unfair on them.
Martin was adamant that various savings - including in student loan administration costs and by moving academic research funding into the science budget - would make the fiscal hit negligible.
She said it was more likely that she could negotiate the scheme in a coalition government with Labour, as the National Party and ACT would likely be philosophically opposed. Labour agreed - broadly.
"If we're in a position to negotiate with other parties, then obviously more funding for education is something that we are going to be happy to talk about," Hipkins said.
Labour have a policy of introducing three years free tertiary study for new students, but other policies were on their way.