Interest free student loans

March 13th, 2012 at 4:00 pm by David Farrar

Stuff reports:

will remain interest free, despite forecasts the national student loan bill will grow to more than $14 billion in the next three years, Prime Minister John Key says. …

Charging interest would bring in considerable extra revenue for the Government, but Key said he would be voted out if National did so.

“Bluntly, if you want me to be really crude about it there are 565,000 student loans out there. If we add interest back on the student loans, it doubles repayment time of the loan.

“If your loan is $50,000, and it’s estimated it will take you eight years to pay it off, we effectively turn it into a loan that is about $90,000 with interest that takes you about 15 years to repay,” Key said.

“That is about the only thing that will get [young people] out of bed before 7 o’clock at night to vote, but it’s not politically sustainable to put interest back on student loans. It may not be great economics, but it’s great politics. It is a bit of a tragedy because it sends the wrong message to young people, it tells them to go out and borrow debt.”

Sadly this is right. Labour’s bribe in 2005 was too big to undo, and we will be paying for it for many years. I’d like to see interest charged at least at the level of CPI, so that loan balances don’t actually reduce in real terms despite no repayments (hence discouraging repayments). But that could only happen if Labour agreed not to reverse it. If National did it unilaterally, it would lead to a change of Government and then the policy would revert back.

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80 Responses to “Interest free student loans”

  1. DJP6-25 (1,387 comments) says:

    Yet another thing your grand children can thank the socialists for when they’re at their second job. That’s the one they’ll have to take so they can pay for all the irresponsible socialist spending. I don’t think they’ll be getting interest free student loans.

    cheers

    David Prosser

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  2. lastmanstanding (1,293 comments) says:

    Itsnt always the way that the arseholes of the LEFT enact policies that lock in their opposition politically.

    Think Clark Cullen Think evil Machevallian twisted individuals with a blind hatred of their enemies to the exstent they will punish the innocent citizens if thats what it takes.

    For these 2 the means always justified the end no matter what the end.

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  3. Spam (588 comments) says:

    I’ll rehash my post from General Discussions.

    John should be honest. “Student loan interest to remain taxpayer funded” would be a more honest story.

    Let me re-write the first paragraph:

    John Key has confirmed that despite the student loan amount being forecast to increase to in excess of 14 Billion in the next 3 years, students will not be charged interest even at CPI or the official cash rate, and the interest charges will continue to be paid by the taxpayer. At the official cash rate of 2.5%, the interest costs to the taxpayer are estimated to climb to $350 Million / annum, and could be much higher if interest rates rise. Government Bonds, seen as a more reliable estimate of the cost of Government borrowing, are currently at 4.08%, indicating an interest cost of $571 Million / annum.

    Charging interest would bring in considerable extra revenue for the Government, but Key said he would be voted out if National did so.

    “Bluntly, if you want me to be really crude about it there are 565,000 student loans out there. If we add interest back on the student loans, it doubles repayment time of the loan.

    The problem for the government is that the repayment rate for student loans is very poor, and nearly 50% of loans are in fact never repaid and must be written-off as bad debts. The true cost to the taxpayer of the student loans scheme is very high, and according to some commentators, becoming unsustainable.

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  4. Cactus Kate (551 comments) says:

    What nonsense. So Nats won’t bring in any policy the effects large amounts of people negatively? Guess that means WFF has to stay and Super and oh don’t put up petrol taxes and let rates go up either….
    If they won’t tinker with the interest free insanity then they should crank up PAYE on repayments so these bludgers pay their loans back even faster.
    Ironically the left argue China has an advantage buying farms because of low interest rates. Well no bigger example of students having advantage over other borrowers than this silly system. Not to mention all of us who went through University paying loan interest even while we studied.

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  5. Matthew Hooton (131 comments) says:

    Rubbish DPF. What an appalling comment by the PM. Inflation adjusting the student loans of graduates – probably a 2% adjustment at most this year – would generate around $300 million a year and I doubt he would lose a single vote.

    [DPF: So are you advocating that the PM should break his election policy, or that they should have campaigned on this in 2011, when 5000 fewer votes would see the Maori Party hold the balance of power?]

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  6. Cactus Kate (551 comments) says:

    Students aren’t great National voters anyway. Greens. Winston bribes them periodically with wiping their loan balances full stop. Remind them once again we had to pay interest while still studying 7% from memory.

    [DPF: It is not the students who get effected. As Key said, it is the 550,000 or more graduates]

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  7. Cactus Kate (551 comments) says:

    And you can’t blame the left for “locking” in a policy when you have all power to change it, pathetic and weak. Imagine Helen Clark faced with a policy Nats had “locked in”? Bulldozer meet accelerator for a bit of a smashing.

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  8. Matthew Hooton (131 comments) says:

    Now Key’s office is saying there will be no changes to the loans scheme at all …
    See http://news.msn.co.nz/nationalnews/8434259/student-loans-safe-keys-office-says
    No wonder there is an $11 billion budget deficit with this attitude.

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  9. Richard29 (377 comments) says:

    I agree with Hooten above. This is not the thermo nuclear political issue it’s being made out to be.

    – When my older sister was studying (in the 90’s under National) she was charged 7-8% compound interest even while studying full time.

    – When my younger brother completed his qualification student loans were completely interest free.

    Rather than swinging from one extreme to another NZ should just bring in a sensible middle of the road policy that is not a massive cost to the taxpayer but doesn’t saddle the young with massive unpayable debt and disincentivise study.

    How about lending at the rate of inflation (or even the government bond rate) with an exemption while studying full time or earnign less than $x amount. This is the system they have in much of the OECD (well at least the bits that don’t just provide free tertiary education).

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  10. plebe (271 comments) says:

    2 term candyfloss key,bring it on.

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  11. Peter Freedman (127 comments) says:

    Cactus Kate:

    A young man I know well went to Victoria and achieved a law degree. This took four years. Then he went back another year to get an Honours degree. During his time in uni he worked part time when and where he could. When he left Vic he could have gained a good paying job with many a legal firm.

    Instead he came to Australia and has worked ever since assisting people who are on legal aid. Instead of a mega salary he earns a modest one by legal standards. He works long hours including most weekends and holidays.

    That is his choice. And I know his family is very proud of him for making it.

    Yet you have the colossal cheek to call him that most favoured of all rightwing labels. A bludger.

    Just hope his father never reads that ignorant insult………..

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  12. Deborah (156 comments) says:

    The refulsal to do anything about the cost of student loans on the grounds of losing votes must start to count as National’s own electoral bribe by now.

    Sooner or later, the government of the day has to start taking responsiblity for the things that happen on its watch, rather than blaming the previous government.

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  13. Weihana (4,537 comments) says:

    Cactus Kate,


    Students aren’t great National voters anyway.

    Perhaps, but the more young people who vote (who don’t usually vote) will still lower National’s share proportionally.

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  14. trout (939 comments) says:

    Can someone explain to me why student loans are written off rather than a charge against an estate when the borrower dies. I recall serious numbers of older people taking out loans to fund all manner of interesting degree papers knowing the money would never have to be repaid.

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  15. Peter Freedman (127 comments) says:

    Now to happier thoughts:

    Good on Kohn Key! A politician who is honest, even just once in his career, deserves a pat on the back and this leftie awards him one.

    He simply says what every polly often thinks: “We should do this beccause it is clearly in the nation’s best interest. But we won’t do it, because it could cost us an election.”

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  16. Cactus Kate (551 comments) says:

    Peter, did he have a student loan? If he didn’t then why even post that comment here? If he did take a loan, he’s taken a seat in a limited entry course, opted out of a well paying profession and chosen relative poverty. Not helping NZ’s poor but in Australia. Could have worked at a top law firm? No he could not. Didn’t have the drive and balls for it.

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  17. Weihana (4,537 comments) says:

    Peter Freedman,


    Instead he came to Australia and has worked ever since…

    From Studylink:

    “Unlike when you are in NZ interest applies on your loan while you are away.”

    Seems fair. But I agree with those that suggest lending should be at the level of CPI.

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  18. YesWeDid (1,048 comments) says:

    ‘Yet another thing your grand children can thank the socialists for when they’re at their second job.’

    Maybe we should start with a round of thank-you’s from babies boomers currently hitting retirement age who waltzed through university for free and are now having their retirement financed by present day students being saddled with loans.

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  19. Daigotsu (456 comments) says:

    @Peter:

    Everybody is a bludger except Hong Kong based tax lawyers, didn’t you hear? They are totally hardworking and productive.

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  20. Weihana (4,537 comments) says:

    Cactus Kate,

    Could have worked at a top law firm? No he could not. Didn’t have the drive.

    How would you know?

    From what I’ve heard a lot of the highly paid legal jobs are mega boring. Representing people on legal aid probably involves a lot of real life situations, ordinary criminals and such like, which is presumably the attraction.

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  21. Cactus Kate (551 comments) says:

    Daigotsu and paid back a student loan at 7% interest. While studying. Unlike today’s little petals.

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  22. Manolo (13,746 comments) says:

    Spineless, spineless, spineless. Shameful admission from Key.

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  23. Cactus Kate (551 comments) says:

    Weihana
    “could have” are two of the most pathetic words put together. Used here to justify non performance. How would I know of the curcumstances? Well given the internet is full of anonymous characters no one knows do you? But the defensive nature of the comment suggests justification for a life that the person hasn’t lived and somehow it is progression being a legal aid lawyer. It is not. It is opting out of something harder.

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  24. big bruv (13,884 comments) says:

    I find it laughable that many here are continuing to attack the corrupt Helen Clark government for the student loan scam yet seem unwilling to mention that Neville Key has had three years to fix the problem.

    The crime here is not that Labour bribed the nation (this is to be expected from corrupt Labour governments) but that so many blue team cheer leaders (sadly these include DPF) seem to accept that we are stuck with interest free student loan and the working for other peoples families bribes.

    If this, as many pundits predict, is the last term of this National government then we should all bloody well hope that at some stage Neville Key decides he has had enough or that his cabinet decide to roll him.

    This nation needs MP’s who have the integrity and courage of that displayed by the first Lange government, when faced with the difficult and potentially fatal political choices the men of the first Lange government decided to do what was right and bugger the political consequences.

    But no…we get Neville Key and a nation of cheer leading idiots who will clap on command and support any policy put forward by their team.

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  25. Nick R (507 comments) says:

    What Cactus said.

    There’s no two ways about it, interest free student loans have become Government policy. It was a bad policy when Labour introduced it and it is bad policy now. But you can’t blame Labour for National’s refusal to do the right thing.

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  26. Weihana (4,537 comments) says:

    Cactus Kate,

    Why is being a highly paid corporate lawyer somehow more respectable than being a legal aid lawyer defending the common criminal and holding the state to its burden? Perhaps not everyone can be a bigshot lawyer for a large firm, but regardless of what you think I do believe there are people who practice law because they love the law and criminal law is one of the more interesting areas to practice in, or so I’ve heard. They are not in it simply for the money.

    I would draw a parallel with pilots. Some pilots don’t go on to fly big commercial jets and it is not because they are not capable. Many like to make a career out of flight instructing or other lesser paid positions, yet they are still some of the most skilled pilots around. They enjoy the job and it’s not always all about the money.

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  27. Manolo (13,746 comments) says:

    Well said, bruv.

    Key has shown his true left-wing colours. He’s another run-of-the-mill corrupt politician, happy to do damage to the country in exchange for votes.

    How low can the National Party sink?

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  28. BlairM (2,339 comments) says:

    When Matthew Hooton thinks you’re being too wet, that should set off alarm bells. What a joke this National government has become. They will accomplish nothing until 2017 when they will inevitably be shuffled off by the electorate, and Labour will resume turning us into Venezuela.

    I’m staying right here in Texas thanks.

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  29. wreck1080 (3,905 comments) says:

    I was arguing with someone (who just finished paying their student loan) that interest free student loans were bad.

    This person thought it was great, because they had the free loan. But, when I explained that they may be paying a hundred bucks a year in tax for the rest of their lives for other peoples free loans.

    They thought maybe it wasn’t such a great scheme after thinking about that.

    Some people just think money is free, until it is explained.

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  30. Cactus Kate (551 comments) says:

    Weihana
    Yet student loans as we are discussing here are ALL about the money.

    And your pilot example doesn’t include anything remotely close to legal aid. Anyone choosing legal aid has opted out. Again “could have” been a lawyer at a top firm (or any fee paying client firm) it’s not about the degree or even your intellect or grades, it’s more about mental toughness and application. Legal aid lawyers lack this as they have opted out.

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  31. berend (1,708 comments) says:

    And so John Key walks this nation into Greek style oblivion.

    The man really has no courage.

    What were the estimates again for the budget shortfall in 2014?

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  32. cows4me (248 comments) says:

    I would assume that many of these students will one day get a job in NZ, find a partner, start a family, buy a house, get a mortgage and face the grim reality that life isn’t a free ride. And when the bills flood the letterbox month after month along with the taxes they will wonder to themselves when will it ever end. They may quickly realise there is no free lunch and that student loan that was suppose to be interest free is now a poison chalice that they and every taxpayer in NZ will have to pay for for ever more. Sadly it seems the National Socialists want their population enslaved for their natural lives, in debt that will never end. These buggers should run a credit card company, trouble is we can’t pay our way out of this mess and there must come a time when we struggle to pay the minimum payment..

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  33. mikenmild (11,247 comments) says:

    Does the National government have any principles apart from the pursuit of power? And are its supporters like DPF happy with this kind of complacency? Superannuation, student loans, working for families – changing any of it seems all a bit too hard apparently. Catching up with Australia? Sory, that was just an ‘aspirational goal’. How about campaigning to do something, anything, and then doing it? Or is National content to let Labour governments make all the significant changes and then preside over the status quo during its own spells in office?

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  34. dime (9,972 comments) says:

    “I would draw a parallel with pilots. Some pilots don’t go on to fly big commercial jets and it is not because they are not capable. Many like to make a career out of flight instructing or other lesser paid positions, yet they are still some of the most skilled pilots around. They enjoy the job and it’s not always all about the money.”

    LMAO!!!

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  35. dime (9,972 comments) says:

    Which govt introduced paying for uni to start with? was it labour?

    If it was national – how did they get away with it then? i guess no MMP.

    Maybe its something they reverse in their dying days of govt and hope like hell Labour arent stupid enough to change it back

    OR

    they get a labour leader with a brain that makes the changes. “we think its the responsible thing to do”

    blame Key all ya like but he makes sense.

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  36. Matthew Hooton (131 comments) says:

    [DPF: So are you advocating that the PM should break his election policy, or that they should have campaigned on this in 2011, when 5000 fewer votes would see the Maori Party hold the balance of power?]

    I don’t accept the way you have framed this (as I said it doubt inflation-adjustment for graduates would lose any votes) but, yes, he should break the promise — just as as he broke his promise, in the first term, that there would be a second round of tax cuts. He broke that promise because the fiscal situation worsened and there were no electoral consequences – in fact people praised him for being prepared to put the country first. But it seems, while he is prepared to break centre-right promises, he is not prepared to break a promise if it is a promise to protect Labour Party bribes, no matter how bad the fiscal outlook becomes. Instead, Bill English is being forced to look for savings by cutting the police for gods sake!

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  37. MikeMan (172 comments) says:

    Peter Freedman (56) Says:
    March 13th, 2012 at 4:26 pm
    Cactus Kate:

    A young man I know well went to Victoria and achieved a law degree. This took four years. Then he went back another year to get an Honours degree. During his time in uni he worked part time when and where he could. When he left Vic he could have gained a good paying job with many a legal firm.

    Instead he came to Australia and has worked ever since assisting people who are on legal aid. Instead of a mega salary he earns a modest one by legal standards. He works long hours including most weekends and holidays.

    That is his choice. And I know his family is very proud of him for making it.

    Yet you have the colossal cheek to call him that most favoured of all rightwing labels. A bludger.

    Just hope his father never reads that ignorant insult………..

    Hang on here a minute, the freedom to go and spend time “Doing Good Works” is something that a lot of people WORK FOR!!!!

    Now I have no issue with the work he is doing, but I am fairly sure that if the debt was growing at even the OCR and there were real requirements to pay at least SOME of the money back each year then our young hero working for the poor of Australia would have paid back his debt to the New Zealand tax payer first.

    Clear the desks with a few years of corporate money grubbing, once you are debt free then feel free to spend your life helping the poor. I am fairly sure that NO other lending institution would allow a “Payment Holiday” of several years because you want to do good works for poor people, so why should the New Zealand tax payer be $571 Million in the hole per annum.

    I think an interest free period of during study and for 12 months after graduating from a degree level course makes sense, after that interest at government bond rates and a requirement to pay interest + 2% of the principle per annum as a minimum.

    Maybe have an extended non-interest period of another 12-24 months for at need skills (Doctors, Nurses, Teachers) if you stay resident in New Zealand, but the need to pay at least 2% of the balance over the year remains.

    If the salary from the qualification does not stack up either pay your own tuition or re-think your plan.

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  38. Weihana (4,537 comments) says:

    Cactus kate,


    Yet student loans as we are discussing here are ALL about the money.

    And your pilot example doesn’t include anything remotely close to legal aid. Anyone choosing legal aid has opted out. Again “could have” been a lawyer at a top firm (or any fee paying client firm) it’s not about the degree or even your intellect or grades, it’s more about mental toughness and application. Legal aid lawyers lack this as they have opted out.

    Where do you suppose that student pilots get the money to pay the fees which in turn pays the salary of a flight instructor?

    I’m not going to imagine what it takes to be a lawyer for a top firm, I don’t know. But I certainly consider legal aid lawyers to be serving a critical function in our justice system. Justice is not only for the rich and those that work to hold the state to its burden on a daily basis should be respected for their work, not derided.

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  39. Weihana (4,537 comments) says:

    Dime,

    “LMAO!!!”

    Feel free to offer your own insight.

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  40. Peter Freedman (127 comments) says:

    Cactus Kate:

    I have read and reread your post and frequently cannot even understand what you are trying to say.

    What, for example does this sentence mean?

    “Hang on here a minute, the freedom to go and spend time “Doing Good Works” is something that a lot of people WORK FOR!!!!”

    Then comes this one:

    “Now I have no issue with the work he is doing, but I am fairly sure that if the debt was growing at even the OCR and there were real requirements to pay at least SOME of the money back each year then our young hero working for the poor of Australia would have Hang on here a minute, the freedom to go and spend time “Doing Good Works” is something that a lot of people WORK FOR!!!!”

    Firstly “our young hero” does pay at least SOME of the money back regularly each year, And when you say he should pay his student loan back “first”, first before what? Eating, sleeping under a roof instead of in a park, taking a girl out to dinner, buying Girl Guide biscuits…….what, Cactus Kate?

    At this stage of your post you seem to have pretty strange views. But then you go completely out of orbit.

    If you believe, as you seem to do, that only debt free people should work for any charity then you have just closed down every charity in the land.

    Have a nice day,
    Peter Freedman

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  41. tom hunter (4,809 comments) says:

    Does the National government have any principles apart from the pursuit of power? And are its supporters like DPF happy with this kind of complacency? Superannuation, student loans, working for families – changing any of it seems all a bit too hard apparently.

    Yeah, yeah mildmike: let me return the compliment you paid me last week by saying that I agree with you entirely.

    Of course your comment begs the question of whether Labour had any principles apart from the pursuit of power when they introduced this scheme? I’ll be generous and assume that they did it both as a bribe in a tough election and in line with their beliefs that doshing out ever more free money is a good things: the usual blend of principles and politics. Either assumption works in the face of the fact that many people at the time predicted that this would be a clusterfuck for any future government.

    But here’s the thing. Even at the time you merely observed that you weren’t all that fussed about WFF and interest free student loans. There’s a big difference between being not enthused about them and actively doing something to oppose them in the first place or fix them now, which I don’t see any political party from your side of the spectrum proposing to do. And of course, why would they, since things like this are the essence of left-wing thinking: free money from government for a social good.

    What do you think should be done here? Is this even a problem from your left point of view, or simply another wedge in the argument for higher taxes? And I’ll ask you the same question I asked last week: is this simply partisan baiting for a group you claim is not particularly my side? Are you merely a more subtle and sophisticated version of plebe?

    Somewhere from overseas I hear a deep, throaty chuckle.

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  42. Viking2 (11,467 comments) says:

    MikeMan (149) Says:
    March 13th, 2012 at 5:40 pm

    I am fairly sure that NO other lending institution would allow a “Payment Holiday” of several years because you want to do good works for poor people, so why should the New Zealand tax payer be $571 Million in the hole per annum.

    correct.
    Try being a landlord with a mortgage and not paying the bill cause you rent to beneficaries on low incimes. guess what the bank will do.
    Mortagaee sale in no time. Never mind about the poor in either case.

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  43. Cactus Kate (551 comments) says:

    Peter Freedman

    For gods sake think and read before you type. Opening your eyes generally helps.

    I didn’t make those comments Mikeman did.

    Generally the first step to longevity in blogging is ensuring you hurl abuse at the right person.

    Have a better day than you are having,

    Cactus

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  44. MikeMan (172 comments) says:

    Peter Freedman (58) Says:
    March 13th, 2012 at 6:42 pm
    Cactus Kate:

    I have read and reread your post and frequently cannot even understand what you are trying to say.

    What, for example does this sentence mean?

    “Hang on here a minute, the freedom to go and spend time “Doing Good Works” is something that a lot of people WORK FOR!!!!”

    MikeMan (149) Says:
    March 13th, 2012 at 5:40 pm

    First of all nice reading skills there Peter!!!

    Now as for my post I think that there is a social contract that if someone pays for something for you, and does not charge any interest on the debt it behooves you to work your A$$ off to pay them back ASAP. Now am I saying that your lawyer friend should live like a pauper and skip meals to payback the student loan, no I do not.

    But picking up with a law degree, paid for by the NZ taxpayer and moving to Aus to work in the legal aid sector is pissing on the largess of the taxpayer. To be clear if he had moved to Aus to earn more and therefore payback his debt faster then all power to him, if on the other hand he was working in legal Aid in NZ again I would have no issue, but tying up capital because he wants to work in legal aid in Australia is putting an unfair burden on the NZ taxpayer and he should be responsible for his part of that $571 Million p.a. of interest costs.

    The student loans scheme was designed to improve the skills on the New Zealand workforce, not to train lawyers for Australia.

    I think it is patently unfair that the New Zealand taxpayer is carrying his debt burden when he is choosing not to maximize his ability to repay that debt.

    I used the student loans system (when it was interest bearing) and I choose not to leave New Zealand until my debt was paid, even though I had the opportunity to do so as I believed then, and I still do today, that if the taxpayer is picking up the tab for my education I have a duty to stay in New Zealand until it is repaid.

    Companies to the same with training bonds for expensive training, why should the government not do it on student loans?

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  45. Bob R (1,370 comments) says:

    **At this stage of your post you seem to have pretty strange views. But then you go completely out of orb***

    @ Peter Freedman,

    At least she doesn’t misrepresent peoples views like you did with Bolt in your guest post.

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  46. Viking2 (11,467 comments) says:

    Student loans can and should be made more workmanlike.
    If a company trains its worker the the costs become an iten in the P & L account that is a cost of doing business.

    That is its becomes a cost before tax. Simple situation been around since taxes and balance sheets were thought of. Accepted normal practice.

    So. when a person accepts a student loan it seems to me that
    1. it should have some conditions attached. Things such as what the $ can be spent on and and an account kept of that spending as in any business. Apart from being a good discipline for that student to learn it also provides a track of the spending that can and should/would/ may be audited.
    2. The extension of the amount available should be contingent on results. Fuck about and not get good results the no further loan.
    3. Interst accrues at Bond rate set from time to time.
    4. Loan repayable in the following manner.

    Once the recipient of the loan starts to earn then the loan can be claimed aginst their taxable income at a repayment deductable rate over say 10 years.

    This achieves discipline on the lending, stress free period whist taking advantage of that loan for that period and most importantly the recipient gets to repay the loan as a deductable tax item at a fixed amount per year.

    It would allow the Govt. to recoop the money loaned for someone else to use.
    It would be attractive to repay the loan becuase of the tax deduction.

    Interest would remain chargeable till the loan is fully repaid.
    If no effort is made then full rates of interest apply

    A rigourous procedure to recoop loans where people go oversea’s should be used and if possible loans should be attached to a security like any and all other loans are.
    If the loan is not repaid or repayable or not attached to a security then they are not loans but a gift by the taxpayer to someone elses child. i.e. the student is a beneficiary and should become a Work and Income Patient.

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  47. Viking2 (11,467 comments) says:

    The student loans scheme was designed to improve the skills on the New Zealand workforce, not to train lawyers for Australia.

    Weeelll. Perhaps they could all (the lawyers), piss off there and our Parliament would be better for it.

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  48. Peter Freedman (127 comments) says:

    Cactus Kate you are absolutely correct, my apologies.

    I have no excuses it was careless, thank you for pointing that out. I’ll try harder next time.

    Am now having a better day as confession is good for the soul.

    Thanks again for your patience.

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  49. EverlastingFire (286 comments) says:

    An incentive for people in NZ that have student loans and who are also in productive work is that it’s interest free. If you leave the country you start paying interest on it. It also seems the IRD is being more aggressive in finding people who left the country and forcing them to pay.

    Anyway, in the long run NZ loses out on this far more than it gains. If the government is not going to scrap it entirely then they should at least focus on courses that can actually result in a contribution to the NZ economy.

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  50. Peter Freedman (127 comments) says:

    Now I am speaking to Mikeman:

    Mikeman, I am still having trouble following your train of thought. This hasn’t improved since you changed from being Cactus Kate (LOL!)

    If you will take a tad of advice from someone who has worked all his life as a wordsmith, it would be this:

    Your sentences are far too long. I counted one with 81 words in it! By the time the reader has struggled through to the end, he has completely forgot what was at the beginning.

    As a result your sentences seem to just go on and on without stopping for a breath for hours on end giving your readers such mental agony that they seriously contemplate suicide or something even more drastic to not just get away from you but also avoid the cat poo on the mat or the fact that the milkman is upstairs shagging the missus without using a johnny which will probably mean even more kids than the 14 they have right now.

    That (pant) sentence (cough) has about (choke) 81 words in it……..(almost expires from want of breath).

    See what I mean?

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  51. Weihana (4,537 comments) says:

    Mikeman,


    if someone pays for something for you, and does not charge any interest…

    …picking up with a law degree, paid for by the NZ taxpayer and moving to Aus to work in the legal aid sector is pissing on the largess of the taxpayer. To be clear if he had moved to Aus to earn more and therefore payback his debt faster then all power to him, if on the other hand he was working in legal Aid in NZ again I would have no issue, but tying up capital because he wants to work in legal aid in Australia is putting an unfair burden on the NZ taxpayer and he should be responsible for his part of that $571 Million p.a. of interest costs.

    If he is in Australia he is paying interest on the loan.

    From Studylink:

    “Unlike when you are in NZ interest applies on your loan while you are away.”

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  52. Weihana (4,537 comments) says:

    Mikeman,


    I used the student loans system (when it was interest bearing) and I choose not to leave New Zealand until my debt was paid, even though I had the opportunity to do so as I believed then, and I still do today, that if the taxpayer is picking up the tab for my education I have a duty to stay in New Zealand until it is repaid.

    Your tuition fees, which your student loan pays for, does not cover the full cost of your tertiary education.

    When will you be paying the rest back? :)

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  53. Peter Freedman (127 comments) says:

    Mikeman, I may have mistakenly changed your name and sex, but my argument still stands.

    If your position is that only debt free people can work for charity then every charity would have to close. Charities largely rely on volunteers, both old and young. Most have very little themselves but debt, and so know how it is feels to be debt laden.

    Denying those people the right to serve others is the most extraordinary proposal I have read in many years. Some people never get out of debt others achieve this only in their very last years.

    Your plan would largely leave charity work in the hands of the rich, and, to put it politely, they would rather be sunning in the Bahamas or playing golf in Bermuda than working for a foodbank or a drop in centre.

    You cannot surely be serious…….are you?

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  54. Peter Freedman (127 comments) says:

    Weihana spot on!

    This man is actually paying MORE by moving to Australia than he would if he stayed in NZ!

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  55. Viking2 (11,467 comments) says:

    Yep the other 80% is also funded by the taxpayer.
    Imagine the savings we would make if education had to be paid for. Wastage and the useless and useless courses that are there to put bums on seats at lowest possible cost to the institutuions to support their avaritous lifestyle would be gone.

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  56. RRM (9,916 comments) says:

    The Govt gives the unemployment benefit Indefinitely to no-hopers who aren’t at work because they are sitting on their chuff watching TV and doing NOTHING. No questions asked, no strings attached.

    Young people who aren’t at work because they are doing 60hr weeks trying to upskill and get ahead in life aren’t offered anything comparable (unless their parents fit a few highly restrictive criteria) even though their position of financial hardship is a short-term, has a clearly-defined end date, and a higher-tax-paying future ahead of it.

    If you charge market interest on student loans without making a student allowance universally available to full-time students, you are effectively saying that only kids whose parents can afford to support them deserve a tertiary education.

    And as Key has correctly recognised, you are saying you value bums and bludgers more highly than aspirational youth…

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  57. big bruv (13,884 comments) says:

    RRM

    “If you charge market interest on student loans without making a student allowance universally available to full-time students, you are effectively saying that only kids whose parents can afford to support them deserve a tertiary education.”

    Utter bullshit!

    What you are suggesting is that until student loans became interest free there was not one single student from a lower socio economic household in tertiary education.

    Mind you, if student loans were no longer interest free and that resulted in a few thousand less social workers and political science graduates then the world would be a far better place.

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  58. Johnboy (16,483 comments) says:

    Education should be free but the bar should be raised so that only people with a few clues and a reasonable chance of passing final exams should get to study for Medicine, Science, Engineering etc. with a full subsidy.

    The lesser able could go for Commerce, Accounting, Law etc. with a partial subsidy.

    The retards could study whatever they liked from Journalism, Librarianship, Ethnic stuff. without any subsidy and fuck all chance of a job at the end.

    The wise, dumb bastards would go for Plumbing, Building and Sparky stuff and all retire early with adequate assets, just like it used to be.

    The really thick pricks will give Gary Parsloe a call to see if he needs a few more recruits. :)

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  59. mikenmild (11,247 comments) says:

    @tom hunter 6.43pm
    Right on. FWIW, I would cut superannuation, WFF and charge interest on loans, among other things, should ever I acquire the chief power in the state.

    Do we see a recurring theme in NZ politics of Labour governments making changes, for good or ill, that then lie undisturbed by their National successors in a very ‘conservative’ tradition?

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  60. nasska (11,468 comments) says:

    Johnboy

    Sorted nicely!

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  61. kiwigunner (230 comments) says:

    ‘I’d like to see interest charged at least at the level of CPI’.

    I’d like to see wages rise at least the level of the CPI.

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  62. bhudson (4,740 comments) says:

    Peter,

    Your sentences are far too long. I counted one with 81 words in it! By the time the reader has struggled through to the end, he has completely forgot what was at the beginning.

    I don’t hear of too many people accusing Dickens of being incomprehensible becuase his sentences were too long. Or John Stuart Millfrom that matter.

    In order to understand the finer points each of them elucidated requires the reader to concentrate; to think, to consider, to reflect. To piece together the whole from the sentence – to distill the ideas and consider them.

    Now MikeMan, for all this reasoning, good or bad, is neither of those. Yet it is not the fault of long sentences.

    Would you rather we were a world of ‘sound bites’, schooled principally by wikipedia and the “google university”?

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  63. bhudson (4,740 comments) says:

    ^ *John Stuart Mill for that matter*

    (damned browser)

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  64. Johnboy (16,483 comments) says:

    nasska. Thanks mate.

    For some time, I have to admit, that I have become concerned that our education system has been pushing out too many Lawyers with a huge sense of entitlement etc. and not enough Scientists/Engineers. :)

    Simple alterations to student subsidies and remuneration rates should take care of that anomaly.

    Good Chippies and Sparkys are of course worth their weight in gold.

    More than say $401,881….. whatever some of them! :)

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  65. bhudson (4,740 comments) says:

    @kiwigunner,

    I’d like to see wages rise at least the level of the CPI.

    You will be overjoyed then that the govt decided to raise the minimum wage by 3.8%, which is more than twice the rate of inflation for the year to December 2011 [1.8%]?

    I’m sure that, as a person of integrity, you will be giving National your vote of confidence.

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  66. tom hunter (4,809 comments) says:

    Do we see a recurring theme in NZ politics of Labour governments making changes, for good or ill, that then lie undisturbed by their National successors in a very ‘conservative’ tradition?

    Indeed we do mikenmild. The sole exception being the government of Ruthless Ruth and the Spud, who took the ball that Roger passed to them and ran with it. At least up to the point where they collapsed from a landslide election win in 1990 to barely hanging on by one (“purchased” – cough) seat in 1993. And that against a Labour party that still appeared to be in tatters from the Lange-Douglas years and held up solely by Mike Moore.

    Never again, has been the cry from the NZ public and now we have MMP to prevent such outrages. But I think people need not have worried as the same cry echoed throughout the National party and it would be timid even without Joh Key at the helm. I’ve long thought this would be a 21st century Holyoake goverment.

    However, you can forget anything emerging from Labour that would challenge the status quo. As with National and Ruth, the scars run deep and party factions keep a close watch on any such gimlet-eyed revolutionaries to prevent a recurrence of the horrors created by principled, committed people.

    And without those we’re left with “pure” democracy, where the John Key and his ilk will bring down upon us the ancient curse of de Tocqueville:

    “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.”

    Given our official founding in 1840 that sounds about right.

    We are so screwed.

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  67. Johnboy (16,483 comments) says:

    And now the Sheeple are slowly getting wise regarding the second arm of the government tax screwing machine namely the Councils Tom what say you for a revolution in Godzone say by 2040? :)

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  68. swan (665 comments) says:

    [DPF: So are you advocating that the PM should break his election policy, or that they should have campaigned on this in 2011, when 5000 fewer votes would see the Maori Party hold the balance of power?]

    Hang on. They also have a goal of getting back to surplus. Having a goal implies that you will make compromises to reach the goal. Or was that just words?

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  69. Frederick (39 comments) says:

    I absolutely agree with Matthew Hooton. Instead of pissing about with tinkering cuts which save bugger all and are probably not worth the political bother why are they not addressing the big ticket items like student loans, WFF.
    Its all very well to say not to break election promises but they should have not committed to maintaining bad policies in the first place heading into the 2011 election – they should have gone to the country with the stark truth – we can’t afford them and they have to go.
    DPF makes great play that he will criticise national when justified. Well he should be sticking the boot in here – its absolutely gutless to say that they will never reverse an obviously uneconomic policy just because of the political consequences.

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  70. krazykiwi (9,186 comments) says:

    Charging interest would bring in considerable extra revenue for the Government….

    What Key meant was would considerably reduce the cost of borrowings, allowing more spending on health and education in the furture.

    … but Key said he would be voted out if National did so

    Translation: I like what Greece did to their economy. Let’s follow their lead.

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  71. Kimble (4,438 comments) says:

    … they should have not committed to maintaining bad policies in the first place heading into the 2011 election – they should have gone to the country with the stark truth – we can’t afford them and they have to go.

    Then they should have sat back and enjoyed a few years of complaining from the sidelines as the Opposition.

    If there is one thing the electorate loves, it has to be the stark truth.

    If you want Labour back in, kk, then just come out and say so. But consider this; you may think National hasnt done enough to unwind Labours bad policies, but what you dont see is the years of bad Labour policies we avoided because National was once again elect-able.

    What do you think Labours policy would have been in the last couple of years?

    The same thing it was before: more spending. And as the quality of their use of taxpayers money towards the end of their reign will attest, Labour had run out of good things to spend it on.

    Right now we would probably be funding Al Qaeda in the South Pacific’s quarterly Steak’n’Beer Goatfuckapalooza.

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  72. seanmaitland (500 comments) says:

    Cactus Kate – if you’re a lawyer, then to most people out there you are far, far worse than a so-called bludger.

    Try getting a job where you actually generate an income through creativity, instead of riding on other peoples coat-tails like a leech.

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  73. Kimble (4,438 comments) says:

    Leeches dont ride on coat tails.

    And lawyers get paid what people want to pay them for the service they have provided. No value, no money.

    Complaining about the way that other people spend their money? Must be a Greens voter.

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  74. Peter Freedman (127 comments) says:

    bhudson (1,523) Says:

    March 13th, 2012 at 9:00 pm

    I don’t hear of too many people accusing Dickens of being incomprehensible because his sentences were too long. Or John Stuart Millfrom that matter.

    In order to understand the finer points each of them elucidated requires the reader to concentrate; to think, to consider, to reflect. To piece together the whole from the sentence – to distill the ideas and consider them.

    Now MikeMan, for all this reasoning, good or bad, is neither of those. Yet it is not the fault of long sentences.

    Would you rather we were a world of ‘sound bites’, schooled principally by wikipedia and the “google university”?

    bhudson, you make some great points and they deserve serious consideration. It’s getting late, even if I am in Brisbane-without-daylight-saving, but I’ll give it my best shot.

    Firstly I have loved Dickens’ works since I was about 12. By 14 I had read most of his novels.

    But I found them, and still do find them, bloody hard going. His style of writing is very flowery and often obtuse and, yes, his paragraphs are too long (Note: Paragraphs, not sentences). But I still try to read them occasionally, with an emphasis on “try” from time to time. Sometimes they get so hard I just have to put them aside, some for months.

    Part of the reason for his writing style is simply that was the norm in the times he lived. Also his novels were written as episodes in magazines and newspapers, so even if you found them hard going, the story dragged you along to make you want to read the next part.

    Dickens became such a celebrity that when he was writing The Old Curiosity Shop, people would run after him in the street, crying and begging him not to kill off Little Nell. But he still did it, perhaps at heart he was just a peverse bastard anyway!

    But do kids today read Dickens? I doubt it. I knew one teenage student, aged 16 or 17, who discovered Dickens and loves his work. But she is the exception, I am sure, and she is a very bright young lady.

    So I reckon people don’t read Dickens simply because he is too hard to comprehend. Part of this is his elaborate use of subplots, and the length of paragraphs he uses. His sentences are often quite short, but a whole para can contain up to ten sentences! The result is just a huge splotch of black over the page and I often have to read a para two or three times before its meaning is clear.

    Kids these days want instant gratification. With few exceptions, they don’t want “to concentrate; to think, to consider, to reflect. To piece together the whole from the sentence – to distill the ideas and consider them” – they want action and they want it NOW!

    Can we do anything about it? I think there might be one.

    When people of any age claim to hate Dickens (or Shakespeare) don’t give them a book, give them a CD, preferably made by the BBC.

    Shakespeare’s works were never written to be read, they were written to be performed. The teenager I mentioned had one of her
    first experiences of the Bard by watching The Taming Of The Shrew in the open in Wellington. She sat there throughout the play, absolutely rapt and still talks about it two years later. This is a play about a very smart young woman running rings around stupid men – now what teenage girl wouldn’t want to see THAT?

    Enough of Shakespeare, but the argument holds water with Dickens, too. Some of his novels are as saucy as any modern sitcom, containing murder, lesbianism, incest………okay, I don’t recall any vampires, werewolves or serial killers as we know them today, but hey, you can’t have everything!

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  75. Ginger Ninja (3 comments) says:

    I remember hearing an economically illiterate Greens party spokesman being interviewed on this topic while Don Brash was leader. The option at that time was a very substantial tax cut and interest on loans, or no tax cut and interest free.

    The Greens pollie was extolling how great the interest free system was, until a caller pointed out that the tax cut would have covered the interest, and once the loan was paid off you still had the tax cut. The interest free loan meant you got the loan free, but had to pay extra taxes for the rest of your life. for some reason the Greenie couldn’t think of an answer.

    Seemed pretty obvious which was the better deal to me. What a shame so many of our uni types appear to have not thought it through.

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  76. rg (214 comments) says:

    John Key’s National Govt is pathetic. He is not prepared to upset students, Maori, etc so he continues to captain the ship as it sinks to the bottom of the sea.
    He is prepared to impose the only all gases ETS on us though and take our sea bed and foreshore away from us. Panderingto everyon ebut his suport base.
    We need a PM who has the courage to do the right thing, John Key is not that PM. Time for him to retire as PM for the New Labour Party and lets get a National Party back. As for me I am voting ACT. You ‘s have to be a fool to vote for National.

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  77. Rufus (667 comments) says:

    I’ve gone back to study. Interest free loans are great – but ridiculous. I paid interest on my first student loan years ago, and I have no problem paying interest on my current loan.

    After all – I’m expecting a higher wage when I re-enter the work force. Interest encourages me to borrow as little as possible, and repaying it as soon as I can.

    What a crazy situation where we allow (mostly) young kids to borrow tens of thousands of dollars, interest free. It won’t really teach them how the real world operates (combined with all the “no interest for 18months” deals on anything ranging from PCs to cars, they don’t stand a chance).

    The USA is currently facing a student loan bill worth $870 billion! Nuts.

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  78. smttc (752 comments) says:

    We probably shouldn’t kid ourselves here. John Key’s government was only ever going to be the lesser of two evils. The electorate knew that when he had to swallow all the dead rats just to get the treasury benches.

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  79. Peter Freedman (127 comments) says:

    Ginger Ninja:

    Good argument except for one point: Can you be confident that a tax cut introduced in, say, 2012, will still remain in place, happy and undisturbed, for the next 50-60 years?

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  80. Peter Freedman (127 comments) says:

    Why is it that when you call out conservatives they run away?

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