Student Loan repayments

May 2nd, 2012 at 7:31 am by David Farrar

Vernon Small at Stuff reports:

Half a million Kiwis with face a cut to their take-home pay in the Budget as the Government looks at ways to raise income to help balance its books.

Prime Minister John Key said yesterday the May 24 Budget would increase the current repayment rate, which is set at 10 per cent of income over $19,084, to force students to pay off their loans more quickly.

Mr Key said the change to the repayment regime would be “modest”, but it would have an impact on the 500,000-odd people who have a student loan and were earning above the threshold that required them to repay.

The savings would be reinvested in the research capabilities of universities to help raise their world rankings. The Government had reduced the writeoff on loans to 45 per cent of student borrowers and aimed to reduce it to nearer 40 per cent by continuing to chase overseas borrowers and through faster repayments.

Mr Key would not be drawn on the new rate, but said it would raise “tens of millions of dollars”.

Figures supplied by Inland Revenue show that at the 10 per cent rate that applies now, $690.6million was received in student loan repayments in the year till June 30, 2011.

That would suggest the rate will increase to just 11% or 12%.

New Zealand Union of Students Associations president Pete Hodkinson said a lift in the repayment rate was a tax increase because it was taken straight out of pay, like PAYE.

No it is a repayment. Union fees are also taken straight out of pay. That does not make them a tax.

“It’s outrageous that graduates should have to pay higher taxes to pay for a budget shortfall that has been caused by the tax cuts that the National Government gave to high-income earners.”

And how the NZUSA President lies about what has caused the budget shortfall. He also ignores that the higher repayment rate means the loan is paid off faster – the graduate does not pay off any extra money.

Labour deputy leader Grant Robertson said the change would put more financial pressure on graduates. The rate should balance the need for loans to be paid off quickly with the need for graduates to meet their costs and be able to take out a mortgage. The increase put that at risk.

Grant is right it will put some financial pressure on, and it is a balance. But if the increase is modest the impact should be modest also.

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98 Responses to “Student Loan repayments”

  1. boredboy (250 comments) says:

    Interesting way to try and stem the brain drain. Or has that horse bolted?

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  2. bhudson (4,740 comments) says:

    How dare they demand students pay back the money they borrowed from them?

    How dare the taxpayer look to reduce their loan interest payments by demanding students pay off their loans sooner? [as we know, there is no such thing as an interest fee loan – someone is paying and in this case it is the net taxpayers]

    Peter Hodkinson doesn’t seem to be complaining about the tax I and others are paying to fund his loan… Not that he wanting anything for nothing of course. (Cue Tui)

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  3. RRM (10,009 comments) says:

    If this means I can no longer afford to buy a house I will be fucking pissed.
    “Just A couple of percent” makes a difference to some of us.

    Thanks for all your help John.

    Why would any student or young graduate vote for National, again?

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  4. Falafulu Fisi (2,179 comments) says:

    Key…

    The savings would be reinvested in the research capabilities of universities to help raise their world rankings

    Key and his advisers must be deluded. The rankings of our Universities will be lifted if irrelevant courses that are being taught there are dropped, or departments that don’t belong at university level must be chopped. For example, the Film , TV and Media Studies at University of Auckland doesn’t belong there. Our economy still needs skills in that area but it really belongs at technical institutes as vocational training courses. The Media studies department at UoA has too many PhD students. I last counted they have 25 or more (this year). This number is more than the combined PhD candidate in Physics & Chemistry. This means that some important area of research in Physics/Chemistry (including other worthy courses from other disciplines) must be downsized (in terms of funding) in order to ration so that the over representations of PhD candidates from the Media studies Department can proceed with their queer theory, gay theory, orgasmology researches.

    The other useless departments to be chopped is the Maori/Pacific studies. They either fold back their courses/papers into the History or Antrhopology or otherwise chopped them completely. There are many other departments & courses that need to be chopped, because those courses don’t give taxpayer a good ROI. Slim the size (courses/departments) our universities and there’s a chance that the overall ranking will be lifted.

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  5. krazykiwi (9,186 comments) says:

    Why would any student or young graduate vote for [insert ruling party name], again?

    Indeed.

    This question was most commentator’s lips around Greece, Spain, Portugal and Ireland.

    Until recently.

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  6. Longknives (4,868 comments) says:

    Personally I’d rather see the Govt come down on the thousands of graduates who have pissed off overseas (earning megabucks in the UK etc) and don’t pay a cent rather than the poor buggars who are struggling away working for peanuts in their home country…
    Wasn’t the whole idea to try to encourage Graduates to stay??

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  7. immigant (950 comments) says:

    I’m surprised by this announcement. I was under the impression the Government would go after the ones that don’t pay at ALL. Instead of squeezing the students that have actually kept up with the rules that were in place when we signed up for the loan and have since paid regularly.

    Hardly seems fair.

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  8. YesWeDid (1,050 comments) says:

    ‘The savings would be reinvested in the research capabilities of universities to help raise their world rankings.’

    Why try and justify the increase in loan repayments with this bollocks? Why not say the truth, the government is desperate to balance it’s budget and graduates with student loans are going to have to pay more.

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  9. jims_whare (403 comments) says:

    Labour deputy leader Grant Robertson said the change would put more financial pressure on graduates.

    One word too many in that phrase methinks – I wonder which word? The one starting with ‘d’ perhaps??

    Why approach Robertson – Shearer still missing in action?

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  10. Cunningham (846 comments) says:

    RRM ‘If this means I can no longer afford to buy a house I will be fucking pissed’. Typical selfish student rant. Who do you think pays for the bloody int free loans you dickhead? Students seem to want everything for nothing and show no gratitude at all for the benefits they get. It really fucking grates me. The real world doesn’t work like that believe it or not.

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  11. mikenmild (11,701 comments) says:

    Falafulu
    While I would differ from you in that I think there can be academic study of film, or media, I quite agree that universities do not focus enough on core research of enduring benefit.
    I posted this yesterday, but it bears repeating: a guy at Waikato University is graduating this week with a PhD for studying the ‘everyday bogan’s identity and community amongst heavy metal fans’. And he got a $100K scholarship for his study!

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  12. Falafulu Fisi (2,179 comments) says:

    The Film, Television and Media Studies department at UoA has got 26 PhD students. There are 2 PhD students in that list that do researches in interesting topics:

    – Māori film-making
    – Queer Timing: The emergence of lesbian representation in early cinema

    Mikenmild…

    a guy at Waikato University is graduating this week with a PhD for studying the ‘everyday bogan’s identity and community amongst heavy metal fans’. And he got a $100K scholarship for his study!

    Mike, this is what the Govt should look at closely. This type of PhD and useless research has no value to the taxpayer. It shouldn’t have been funded in the first place. If it was a private institute then that’s fine, but not on taxpayer’s pockets.

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  13. rolla_fxgt (311 comments) says:

    I don’t understand why Key’s doing this, whoever’s giving him this type of advice should be taken quietly out the back and shot. It makes no sense to punish those of us who stay here, pay our taxes here, and contribute to NZ, buy upping our repayment rate. I get that the govt wants to have student loans, and the debt payed down quicker, but the best way to do that is to encourage us to do so, not force us into it.
    Now its going to be that much longer till we can afford a house, settle down, have families etc. If we decide to stay in NZ at all, after all we can earn more elsewhere. Surely this isn’t what Key wants?
    Why not say we have 5-10 years from the date of graduation to pay our loans back, and after that point interest will be added? Or even up the voluntary repayment bonus?
    Its already going to cost the govt more money, I’m going to pull my voluntary/overpayments back from IRD, and use them on myself, rather than have it come off my loan balance. Purely as as a sign of dislike at this policy, that doesn’t seem to make any economic, or rational sense.
    Take the money off benificiaries, or govt super, the unproductive sectors of the society to fill the obvious economic hole, not the sector of the economy that’s going to be the only thing keeping NZ afloat over the next 40+ years.

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  14. mister nui (1,030 comments) says:

    RRM said:

    If this means I can no longer afford to buy a house I will be fucking pissed.
    “Just A couple of percent” makes a difference to some of us.

    RRM, if this small increase means you can no longer afford to buy a house, then there is no way you could afford to buy a house before that. What if interest rates, on your much larger house loan were to rise? That would have you in a much more precarious position than any small increase in your student loan DEBT.

    You should be focussing on paying off debt before getting into more debt. This sense of entitlement, shown by your belief in your right to own a house whilst still having a debt to the taxpayer over your head, has to end.

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  15. mister nui (1,030 comments) says:

    Well said Cunningham.

    RRM, What about all those people who have no student debt and have never had, but pay too high taxes to fund your education and your forward earnings, that cannot afford a house? Do they not have a right to a house just like you believe you do?

    But they can’t have, it because they’re too busy working hard to subsidise you!

    Fucking lefties and their sense of entitlement!

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  16. Elaycee (4,404 comments) says:

    RRM says: “Why would any student or young graduate vote for National, again?”

    The same students and young graduates will hopefully understand economics 101 – a taxpayer funded, interest free handout is simply not affordable.

    Student loans are funded by the taxpayer. It is a LOAN that has to be repaid and any decision to review how they are to be repaid is no different to a bank reviewing and posting a new mortgage rate.

    The words ‘self interest’ spring to mind when I read of objections….. some people need to drag themselves into the real world.

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  17. immigant (950 comments) says:

    Come to think of it my FTVMS degree was a colosal waste of time.

    I mean I had to write an essay on the homoerotic undertones in “Top Gun” and expand the on the relationship between Mufasa and Simba from a queer perspective.

    I’m not making this shit up. At the time I thought – “Well these people are infinetley more educated then I am, I just need to shut up and write.” Now I’m not so sure it was time or money well spent.

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  18. RRM (10,009 comments) says:

    Cunningham (107) Says:
    Who do you think pays for the bloody int free loans you dickhead?

    People who received a totally free taxpayer-funded education, and are about to receive a totally free taxpayer-funded retirement (courtesy of me) for a large part.

    Meanwhile, Nats are all about “We need to reverse the brain drain”, “we need to catch up to Australia” I wonder if this will help…

    mister nui (699) Says:

    Fucking lefties and their sense of entitlement!

    LOL, I didn’t say anything about any”right” to have a house, you sad angry little fulla.

    OTOH we could stop paying Maori tribal elites billions each year too, but we don’t. “Fucking Maoris” and their sense of entitlement eh…?

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  19. Elaycee (4,404 comments) says:

    Yes We Did says: “the government is desperate to balance it’s budget and graduates with student loans are going to have to pay more.”

    …. pay MORE???? FFS – how about paying SOMETHING!

    But the sense of entitlement is noted….

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  20. mikenmild (11,701 comments) says:

    Here are few examples of university research funded by the taxpayer last year through the Marsden Fund:
    The role of sport in male-dominated leadership cultures – $317,623
    Realism, romance, and the settler colony: Literary form, imperial territory and political economy, 1829-1915 – $345,000
    The cultural evolution of religion – $775,000
    Experience, rationality, and the way things seem – $327,234
    Karl Popper: A life – $687,000
    Norms, volition, and nuclear destinies: the power of anti-nuclear policy advocates – $290,477
    Public engagement towards a more inclusive and equitable society -$790,000
    Geographies of media convergence: Spaces of democracy, connectivity and the reconfiguration of cultural citizenship – $800,000
    Are old males still good males and can females tell the difference? – $345,000
    The ‘machinery of transcendence’: Unattended moments in the Modernist tradition – $822,000
    Post-research conversations as a means to overcome the impass between ethics committees and social scientists – $810,000
    Exploring an oxymoron: Smoking as an ‘informed choice’ – $615,000
    Onscreen indigeneity: The case of Maori Television – $770,000

    By charging students a little more in loan repayments, we will be able to afford some more of this research!

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  21. immigant (950 comments) says:

    Elaycee

    Buddy, if you stay and work in NZ like some people chose to do you do pay “something”. The whole point is that no one is chasing the loan doddgers overseas but sticking it to people who have been honest, paid and stayed in NZ to work for shit pay and try and pull this country out of the hole it is headed into.

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  22. mister nui (1,030 comments) says:

    Yes RRM, fucking Maori elite and their sense of entitlement.

    The implication of your post was that you have a right to have a house and mortgage whilst carrying debt to the taxpayer.

    But, you don’t address the fact that there are other people out there paying too much tax to subsidise you, who cannot afford a house. What about them?

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  23. mikenmild (11,701 comments) says:

    immigant
    I’m a big fan of not letting anyone leave the country unless they have paid any debt they owe to the taxpayers, be it benefit overpayments, fines or student loans.

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  24. Spam (588 comments) says:

    Oh for fuck’s sake. Graduates need to grow a pair and stop whining. 10% of income above $19,084? So what is a student at university typically living on? Say $250 a week?

    Average graduate starting salary is $40k (according to the NZUSA….) So with tax ($7,210 /annum) and student loan repayments ($2,091), the take-home pay is > $30,700k / annum, or $590 / week.

    So the whiny graduates are effectively more than doubling their cash, and whining about it. Go figure.

    Disclaimer: I came out of university with a $16,000 loan, started earning $23,000 / annum, and paid off my loan in two years, all the while being charged interest (in fact, I was charged interest while I was still studying).

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  25. bhudson (4,740 comments) says:

    It makes no sense to punish those of us who stay here, pay our taxes here, and contribute to NZ…

    rolla_fxgt,

    That reasoning applies in equal measure as to why the taxpayer should not be punished by having to pay the interest on all of the students’ loans.

    Equally again, if you hold that it is fair for the taxpayer to fund load interest for those who stay here, pay taxes and contribute, then the taxpayer should be paying the interest on my (and others’) mortgage as I (and others) meet those criteria

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  26. immigant (950 comments) says:

    Spam

    Fuck right off buddy. You try living on that kind of money with rent and food costing as much as it does. It’s not 1982 anymore especialy if you live in Auckland.

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  27. Spam (588 comments) says:

    Oh – and I forgot to add: Student debt is $12 Billion, with a bad-debt write-off of approximately 45%, so the taxypayer will have to find 5.4 Billion of this. Plust we are paying approx half a billionin interest.

    So not only did I pay interest on my student loan, I’m now having to pay the interest on all the other fucking ingrates.

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  28. Spam (588 comments) says:

    Fuck right off buddy. You try living on that kind of money with rent and food costing as much as it does. It’s not 1982 anymore especialy if you live in Auckland.

    Well don’t live in auckland. Duh!

    Poor widdle gwaduates.

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  29. immigant (950 comments) says:

    I think in the interests of this discussion we need to clearly seperate those graduates that have kept to their obligations under what ever student loan scheme they signed up under, and those who did not and ran from the debt. Stop lumping all graduates with loans into one pile. it’s stupid and insulting.

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  30. immigant (950 comments) says:

    Spam

    Good luck finding an graduate job in Upper Hutt you simpleton.

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  31. immigant (950 comments) says:

    Spam admit it, you never had a student loan, your land rich wanker parents paid for it all and also ‘loaned’ you for your first house too. Cause thats how you come across.

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  32. Elaycee (4,404 comments) says:

    @Immigant – the amount you ‘pay’ relates to repayment of the student loan principal. But you pay nothing for interest because that cost is borne by the taxpayer.

    But your point is fair – there *should* be a greater emphasis on those who take advantage of the interest free loan and then choose to bugger off on their OE or whatever. In fact, this entire student loans scheme is like Swiss cheese and has been exploited at the expense of the taxpayer.

    It simply cannot continue as it is….

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  33. Cunningham (846 comments) says:

    RRM some people actually studied when loans weren’t interest free. Students want more and more and seem to have no concept whatsoever that it has to be paid somehow. The taxpayer subsidises their course, loans, allowances etc. Meanwhile our universities are spiralling down the rankings. The quality of universities is being completely fucked over just so students can get everything they want. I wonder how students will feel in 15-20 years time when the courses they do at our universities are worthless because that is where our tertiary education sector is heading if we keep heading down the path we are. Yes people used to get degrees for nothing but times have moved on. No point in crying about it as its not going to change.

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  34. Spam (588 comments) says:

    Good luck finding an graduate job in Upper Hutt you simpleton.

    here’s 98 of them.

    You’re welcome!

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  35. Scott (1,817 comments) says:

    Although I understand this will be difficult for some students financially, at least John Key is in the real world and trying to do something about our debts, which are massive. The free student loans was an election bribe by Labour in my opinion. These loans will have to be addressed in the way the National government is trying to do. They are simply unaffordable.

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  36. EverlastingFire (286 comments) says:

    They should really stop oldies from taking out big loans as well. There’s little to no chance of someone in their 60’s coming out of study with a 10k loan that’s going to pay it off before they’re dead.

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  37. Spam (588 comments) says:

    Spam admit it, you never had a student loan, your land rich wanker parents paid for it all and also ‘loaned’ you for your first house too. Cause thats how you come across.

    As I said:
    Disclaimer: I came out of university with a $16,000 loan, started earning $23,000 / annum, and paid off my loan in two years, all the while being charged interest (in fact, I was charged interest while I was still studying).

    I lived on $120 / week at Uni. When I cam out, I live on $200 / week, and used the rest to pay off my loan.

    Oh – and if insulting my parents is your only comeback, then I guess you didn’t take a degree that required any sort of logic, reasoning or critical thinking, right?

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  38. immigant (950 comments) says:

    Spam – The old link to “Seek”. You are a simple one aren’t you?

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  39. immigant (950 comments) says:

    You can’t live on $200 a week since about 1999 so you’re full of it.

    Probaly lived with mom and dad the whole time and thought what a clever progressive graduate you are.

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  40. Spam (588 comments) says:

    You can’t live on $200 a week since about 1999 so you’re full of it.

    Again you show a lack of critical reasoning. I was at University from 1992 to 1995.

    Using the inflation calculator, my $120 / week in 1995 equates to $172 / week now (general inflation) or $275 / week (housing).

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  41. Lipo (229 comments) says:

    We should be having a debate in the country on why we fund any useless fucking courses at University rather than target and fund only courses and/or careers that will in fact improve New Zealand’s economy

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  42. rolla_fxgt (311 comments) says:

    @bhudson

    No you miss the point entirely.

    Regardless of whether I stay in NZ or not it seems the repayment amount will go up, so I have a choice, stay here for shit pay, but a slightly better lifestyle, i.e I can get out into the country pretty easily, or I can leave NZ earn more overseas, and still have a decent lifestyle, but will maybe miss NZ a little.
    So regardless I still have to pay more back on my student loan. Lets say it goes up to 12% from the current 10%, on average the govt gets an extra $500 a year from each student loan holder. But if I leave NZ looses my spending, and my taxes, maybe for life, which are worth far more to the NZ taxpayer than a measly $500 a year, especially when there are better ways to get that $500 off me, that’ll keep me in NZ, and happy. And this year I overpaid my student loan by $650, which I’m now going to claim back, so already the govt, has at least for me, lost more than it’ll gain from this silly policy, when there are easier ways to change it to pay loans off quicker.
    I don’t resent having to pay my student loan, in fact I welcome the fact I was given one, I just want it to be fair to those of us who do have them, and at least pretend to hope to keep us in NZ.

    By the way, I was against interest free student loans in the first place, and think interest should be put back on shortly after you graduate, as I said in my original post, but maybe you didn’t read that part?

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  43. adze (2,129 comments) says:

    Well, there goes my recent pay rise. Until the student loan is paid off anyway.

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  44. mikenmild (11,701 comments) says:

    Lipo
    We probably fund too many people to go to university in total, with bad effects of quality. There is a case to fund a wide variety of courses, but it’s certainly out of whack at the moment.

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  45. Falafulu Fisi (2,179 comments) says:

    Mikemild, so you think that the types of researches you have listed above (through the Marsden Fund) were the ones that have helped lifted our University rankings over the past few years? Umm! We’ve been declining over the last few years.

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  46. immigant (950 comments) says:

    Spam

    The diffirence between you and me. Is that you are pulling numbers out of your ass and trying to make them fit into your world view.
    What I am doing is pointing out the brutal facts of life, they way that they are, not the way you want them to be.
    Just like a 2006 Nissan Stagea is suposed to get 14k per 1 liter of gas but actualy drives around closer to 10kpl.
    On paper everything looks good but in reality it often doesn’t work. Especialy when it comes to people.

    Granted when you live with your mum $275 can go a long way. You can even save for a house that way. But many people don’t have the luxury that you had. Also inflation has nothing to do with the rise in rent and food prices, rise in gas prices and all the other factors. So how about you put that in you ‘critical thinking pipe’ and smoke it or something?

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  47. dime (10,100 comments) says:

    “If this means I can no longer afford to buy a house I will be fucking pissed.
    “Just A couple of percent” makes a difference to some of us.”

    mate, if youre cutting it that fine, you probably shouldnt be buying a house.

    whats the increase gonna cost ya? $10 a week? $20??

    just be thankful youre not paying interest. Dime paid back about 46-48k on a 21k loan… admittedly i went overseas and didnt pay anything for a few years so it built up. opps.

    if i hadnt have had to pay interest on my loan i wold own another house. i estimate id be 200k richer than i am now. BUT shit happens. it was the price i paid for an education. i dont begrudge the government of the day.

    in summary RRM, man the fuck up and pay your way in the world and when someone gives you something like the tax payers are currently giving you, you say thank you.

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  48. KH (695 comments) says:

    45% in default !!! What the hell is going on.
    Obviously another system run by the uncivil servants spending other peoples money.
    If the default was zero. The scheme would be possibly affordable.

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  49. mikenmild (11,701 comments) says:

    Falafulu
    No, I just offered those as examples of the kind of research that gets funded at present in quite significant amounts.

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  50. Ryan Sproull (7,279 comments) says:

    Why not have a progressive repayment rate? 10% above 20K, 12.5% above 40K, 15% above 60K.

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  51. Archer (215 comments) says:

    So Hodkinson would also consider Kiwisaver contributions to be a tax? Did he protest against Labour when they imposed that tax on students?

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  52. Carlos (683 comments) says:

    Is it an option for banks to take over the running of student loans and let the the government get out of the business of student loans completely? There are enough of them to compete to attract students and they would be keen on chasing up those who don’t pay back their loans. Perhaps they could do an interest free period while the student is studying full time and then charge interest after that. Any down sides here that I’m missing?

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  53. Than (488 comments) says:

    It may not technically be a tax, but that’s just petty quibbling over semantics – Hodkinson is perfectly correct when he says it behaves exactly like a tax increase, and it will reduce graduate’s in the hand income.

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  54. Luc Hansen (4,573 comments) says:

    It seems DPF is a bit sensitive on one point:

    “It’s outrageous that graduates should have to pay higher taxes to pay for a budget shortfall that has been caused by the tax cuts that the National Government gave to high-income earners.”

    And how the NZUSA President lies about what has caused the budget shortfall

    “Lies” is a fairly strong word to use to describe a statement that is at least partially true. The great defence by English and Key of tax their cuts for the higher income earners is that the counter of increasing the GST take made their cuts, overall, fiscally neutral. That is not a lie, but it is the great deception, because while those below about $65,000 struggle, in fact, to breakeven overall, those above race into the black – the higher the income, the greater the gain.

    And the reverse is true, also, that the lower the income the greater the deficit for these people, many of whom work at the rock face of our most menial and low paid jobs. A truly regressive exercise justified only by ideology (the “entitlement” to be greedy) and voodoo economics.

    So, for example, we are in fact borrowing $1000 per week from the Chinese (if that is, in fact, who is funding our deficits) to pay John Key a tax cut that simply adds to an already overflowing bank account.

    From memory, the tax cuts mentioned by the NZUSA president, to those earning above 65,000, say, are adding to the deficit at the rate of 30-40 million dollars per week. And since we are currently borrowing, according the a recent analysis, 150 million per week, that is a fair chunk of the deficit explained right there.

    But isn’t much simpler, for a simple right winger, to shout “Liar! Liar! Pants on fire!”? :-)

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  55. Griff (8,175 comments) says:

    How to ensure single graduate leave new zealand
    1 insist if they stay in the country they must pay interest and capital on their student loan When if they leave they pay nada
    2 increase their net tax burden to fund WWF
    3 structure government spending so the only jobs available are working on such thinks as how to make us all behave like stone age savages

    how to stop them
    with draw the passport of any that remain oversea for more than two years with no payments on their student loan
    abolish WWF
    restructure unis so the courses available actually have some application in the modern world.sack the management responsible for the growth in media studies ethnic studies the justification of homo lifestyles and other stupid socialist bullshit.
    dismantle the moari social;l bullshit and redirect the funding towards the study of how to stop the moarifacation of new Zealand culture by the leftys who would like us to regress into the stone age.

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  56. bhudson (4,740 comments) says:

    @rolla_fxgt,

    No, I think you missed my point – which is that your logic holds true for both sides of the argument. If your reasoning is deemed valid, using the same reasoning, the opposite argument is equally valid.

    As in your reply when you talk of rising repayments potentially encouraging people to leave NZ as they will be better off and the country being worse off. That argument holds equally true for those funding the interest on loans. As the loan bill grows and repayment lengthens, effective interest payments are rising and therefore they (that taxpayers funding the interest) might find themselves presented with better fortune offshore. The net affect of them emigrating leaves the country in a worse position (fewer people to continue to pay the interest.)

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  57. bhudson (4,740 comments) says:

    Than,

    Hodkinson is perfectly correct when he says it behaves exactly like a tax increase, and it will reduce graduate’s in the hand income.

    Using that logic the a graduate entering into a hire purchase contract and paying by direct debit is a tax increase.

    Hodkinson’s remark simply showed he needs to spend less time on student politics and more time on learning

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  58. YesWeDid (1,050 comments) says:

    @Luc Hansen – DPF works on the premise that if he repeats something often enough then it must be true.

    National cut taxes, we are borrowing to fund a deficit, therefore National’s tax cuts are paid for by borrowing. It’s pretty bloody simple.

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  59. Luc Hansen (4,573 comments) says:

    Now that three year old has stopped jumping around on my lap wanting to address DPF directly, I would add that students need to acknowledge that, these days, there is no free lunch, and higher repayments are a reasonable trade off to the removal of interest on their loans.

    Any student who doesn’t, in fact, take advantage of the current interest free deal to get shot of their loan ASAP is doing themselves a disservice. They remain interest free only at the discretion of governments, and we may one day elect a government with the courage of its convictions and reinstate interest along the lines of the Australian model.

    As regards student allowance cuts, I’ll wait for the details but if they are targeted by income level, I’d support that in principle. Sadly, the track record of this government doesn’t give much cause to hope for anything other than more freebies for the rich.

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  60. Than (488 comments) says:

    @bhudson – No, a hire purchase is completely different.

    HP repayments will be a fixed amount per week/month (as are Union fees), not a proportion of the persons income. A direct debit is also under the persons control, unlike student loan deductions which are taken out before the money even gets to your account.

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  61. bhudson (4,740 comments) says:

    Than’

    No, a hire purchase is completely different.

    No it isn’t – they both represent the repayment of a loan for goods or services. But to take your logic further along, a floating rate mortgage (which is but an HP under another name) is therefore like a tax because the amount you have to repay can vary over time

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  62. Than (488 comments) says:

    bhudson – tell me another loan arrangement where you are compelled by law to repay a fixed proportion of your income and I will accept the equivalence.

    For an HP I have to pay $X per week. If my pay goes up, I can choose to repay faster if I want, but I’m not compelled to. If my pay goes down, I still have to repay the same amount regardless. A student loan is different from all other types of loan in that the amount you have to repay each week is strictly linked to your income.

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  63. bhudson (4,740 comments) says:

    tell me another loan arrangement where you are compelled by law to repay a fixed proportion of your income and I will accept the equivalence.

    Than, it is merely a condition of the loan. Just as mortgages have a provision that enables the bank to demand that you increase payments (including a one off payment) to retain x% equity, and they can change that % at their discretion.

    That different loans have different terms and conditions doesn’t make one a tax vs a loan. What is more there is no restriction against your appliance retailer setting out an HP agreement that sets your repayments in accordance with your income.

    Setting contributions in accordance with income might be a characteristic of taxation, but it is not a definition thereof.

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  64. YesWeDid (1,050 comments) says:

    @bhudson – Student loan repayments go to the government, they are removed directly from your pay, they are not optional, they are a percentage of what you earn. I’d say you could call them a form of taxation and you would not be wrong.

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  65. bc (1,377 comments) says:

    There’s an interesting generational thing going on here.
    Younger generations paying off their student loans have every right to feeling annoyed at an older generation having gone through university with an universal allowance and (depending on age) now getting an universal pension, being lectured to about having a sense of entitlement.

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  66. bhudson (4,740 comments) says:

    YesWeDid,

    I’d say you could call them a form of loan repayment and you would not be wrong

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  67. Spam (588 comments) says:

    Spam
    Granted when you live with your mum $275 can go a long way. You can even save for a house that way. But many people don’t have the luxury that you had.

    I didn’t live at home while at University, nor after graduating. I flatted with 5 other people at Uni, and with 2 others once leaving.

    Also inflation has nothing to do with the rise in rent and food prices, rise in gas prices and all the other factors.

    So your degree clearly isn’t in economics. Liberal arts? Media Studies?

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  68. Than (488 comments) says:

    @bhudson – putting proportion of income into a loan contract is possible I guess, but I don’t know of any loan that does it. HPs and personal loans don’t. Morgages don’t – equity percentage is not the same as income.

    But I’m done arguing with you. Cling to your difference that makes no difference if you like. The pros and cons of increasing loan repayments are exactly the same as the pros/cons of a tax increase, an dusing a different term does not change that.

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  69. Brian Smaller (4,024 comments) says:

    So an increase int he rate at which compulsory loan repayments are made is a tax increase according to all the lefties here. I thought you lot loved tax increases.

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  70. rolla_fxgt (311 comments) says:

    @ bhudson, you forget that graduates are taxpayers too (so as taxpayers, we too pay for the interest the govt pays on its student loan borrowings), and you can either have us here paying our taxes and spending in NZ, leading to jobs and more money for the government, or you can have us elsewhere, and only paying our student loan repayments.
    Really its your choice, but when NZ can no longer afford govt super because its scared all the taxpaying workers off shore, then don’t be suprised when we alll turn around and say, we told you so.

    The government borrows money to fund all sorts of things, including govt super, it just depends how you arrange the figures, I can arrange them to say that the govt doesn’t borrow to fund student loans at all, and that it comes out of Crown revenue, and that actually we are borrowing just to fund govt super, and benefits, so we should put a repayment levy on benefits and super of lets say 20c in the dollar.
    But I’d be wrong to do so, in reality student loans are part funded through crown revenue, and part funded through crown borrowing.

    The simple fact is, you can either pay for us to train here, and stay here, and reap the benefits, or you can pay for us to train here, and bugger off and leave, leaving you to pick up the costs that that brings for NZ inc.

    I’m not arguing Student Loans need to be paid, and paid quicker, just that there are better ways to do that, and Key and co need to use them, and crack down on those overseas, before scaring the rest of us off overseas, to leave you to the NZ retirement home.

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  71. Spam (588 comments) says:

    The simple fact is, you can either pay for us to train here, and stay here, and reap the benefits, or you can pay for us to train here, and bugger off and leave, leaving you to pick up the costs that that brings for NZ inc.

    Pretty strong case of entitlementitis there.

    The other option is to make students pay for their course costs as well.

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  72. rolla_fxgt (311 comments) says:

    @ Spam

    No just a sense of reasonableness here, nothing more, nothing less. If anything its anyone older than 50 in NZ that have entitlementiits.

    But hey if you want NZ to just become a country full of immigrant and retirees, then fine go ahead, just don’t complain afterwards.

    Perhaps Spam you are just a little bitter about your uni experience? Clearly your degree wasn’t in economics either, or else you just missed the entire concepts of greater good, and economic phycology.

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  73. adze (2,129 comments) says:

    People are mugs going to uni these days anyway, unless they have a very specific career goal in mind (one that either requires a specific degree, or that will soon pay enough to pay off the loan quickly). Uni education has become poor value for money in the digital age.

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  74. RRM (10,009 comments) says:

    @ dime –

    Good call, if as you say a sensible check of the figures shows it’s a matter of $20 or 30 pw then yes it’s a complete non-issue…

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  75. dime (10,100 comments) says:

    RRM – i dont think they will jack it to 15%. Hell, we need people spending money on other stuff.

    if its 2% and youre earning 80k its $23 a week.

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  76. dime (10,100 comments) says:

    I did laugh when some “President” of some bunch of students said “its not our fault the national party cant reign in public spending” lol

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  77. Spam (588 comments) says:

    No just a sense of reasonableness here, nothing more, nothing less. If anything its anyone older than 50 in NZ that have entitlementiits.

    But hey if you want NZ to just become a country full of immigrant and retirees, then fine go ahead, just don’t complain afterwards.

    Perhaps Spam you are just a little bitter about your uni experience? Clearly your degree wasn’t in economics either, or else you just missed the entire concepts of greater good, and economic phycology.

    Says the guy who (to paraphrase) says: ‘gimme gimme gimme and if you don’t I’ll just take my tax-payer funded degree and fuck off somewhere else’

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  78. graham (2,346 comments) says:

    Couple of thoughts:

    1. University is meant to cater to the elite. Maybe if there are students who they can’t see how to manage their budget or raise their income or cope, they aren’t bright enough to go to university.

    2. How many people go to University to gain an education which will enable them to make a meaningful contribution to our country and society – and how many just go for somethig to do, or to study something they’re interested in but won’t be using in a job, or because they have no freaking idea what to do with their lives? Example: apparently, Sue Bradford has an MA in Chinese. Good on her, but what job has she ever done that required that particular skill? If you’re studying something which doesn’t benefit New Zealand, why should New Zealand subsidise you?

    3. University is not the only option for ongoing education. I am in an industry where I need to constantly update my knowledge. I do this primarily through self-study, using text books which I buy and researching on technical websites. I don’t get any subsidised loans for buying my own text books.

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  79. rolla_fxgt (311 comments) says:

    @ Spam

    No yet again you miss what I’m saying, I’m saying keep to the original agreement I had with the taxpayer of NZ, and encourage me in other ways to pay it back quicker.

    Put bluntly I’m saying to Key, keep your contract with me, or if you change it, I’ll change mine with you, and bugger off overseas. In which Key, and other NZ taxpayers loose far more than they gain.

    Pretty Simple really, but then you probably did one of those “complicated degrees” like english lit, that us mere commerce graduates, couldn’t possibly understand, as it has too many words for us.

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  80. Elaycee (4,404 comments) says:

    ‘Put bluntly I’m saying to Key, keep your contract with me, or if you change it, I’ll change mine with you, and bugger off overseas. In which Key, and other NZ taxpayers loose far more than they gain.’

    Then please don’t squeal if you are stopped at the border and required to stump up with all outstanding monies before you are allowed to depart. :D

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  81. Paulus (2,660 comments) says:

    A couple of days ago there was an article (Herald) about two young attractive 22 year olds at Auckland Uni, and what their financial expectations were by the age of 30.
    The principle point that I am raising is not their expectations ($80 – $100k) but that they were both studying Political Science (aka Helen Clark). They did not know where and whether they would get jobs.
    FFS Political Science in New Zealand would have to be the Labour Party or a Trade Union. Neither looked the right types for these roles. (pretty, white, intelligent, not lesbian (I don’t think)) so where to ???

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  82. Spam (588 comments) says:

    rolla_fxgt:
    You are perfectly entitled to go overseas. But to try and claim the moral high ground because ‘The government changed the original agreement’ is pretty weak. Do you reserve the right to piss off overseas every time any policy in New Zealand changes? Tax rates change. Excise duties change. GST changes.

    I assume that the taxpayer funded at least 75% of your direct course costs, and all the interest on whatever loan you have. When it comes to your student loan, you made a contract to pay it back. Is pissing off overseas not breaking your part of that contract? WHen it comes to your education, you owe society. Society does not owe you. That is the point.

    And no – I did an engineering degree.

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  83. graham (2,346 comments) says:

    Paulus – exactly. Why are they studying something when they don’t know “where and whether they would get jobs”?

    Hell, before making a decision on what you’re going to study for the next few years and borrowing a major chunk of money, you would think they would look into the job market in their intended area of study. Have students never heard of research?

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  84. Rat (383 comments) says:

    Happy to report that I had a student loan during the nineties and paid off, even paid interest, all with a young family on tow.

    No complaints from me

    But will easliy complain about those who believe they had some form of entitlement to this priviledge. I agree on the previous poster that Graduates shouldnt leave these shores on a working holiday unless they have paid their debt to the taxpayers, its the least they could do to show thanks to the NZ Taxpayer, not only for funding 70% of their course but who have lent them the money to do so.

    Isnt it funny that those Act on Campus clowns campaigned on behalf on someone who advocates they pay interest on Student Loans and wants them to wait till they are 20 before they can drink RTD’S

    Wee petals

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  85. Carlos (683 comments) says:

    Posted this earlier, but just came out of moderation so will ask it again:

    Is it an option for banks to take over the running of student loans and let the the government get out of the business of student loans completely? There are enough of them to compete to attract students and they would be keen on chasing up those who don’t pay back their loans. Perhaps they could do an interest free period while the student is studying full time and then charge interest after that. Any down sides here that I’m missing?

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  86. Paulus (2,660 comments) says:

    Carlos

    A great idea – has been suggested before but worthy of following up.
    But Banks have a duty to their Shareholders – Governments don’t.

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  87. rolla_fxgt (311 comments) says:

    @Spam

    No I don’t seek to leave everytime, but I made a decision to invest in my education, based on factors, such as what I was good at, what provided good job outcomes, and most importantly what I could get a return on my investment in. Then the government went and changed the contract (as is their right), after making a song and dance about making NZ better for young NZ’ers and retaining highly skilled people. I voted accordingly, and frankly I now feel ripped off.
    Allegedly the previous changes of charging a yearly fee for loans, was meant to cover the costs of maintaining the system of student loans, but now we apparently need this too.

    Its almost like the left hand doesn’t know what the right hands doing with this decsion.

    @ Carlos
    your idea has merit, and is how the interest free period should have run, but now should be something around 5-10 years interest free (either including or excluding study), thus encouraging us to pay back our loans quickly, and keeping us here in NZ, and allowing us to also set down roots by buying a home etc.

    @Elaycee

    That would require a law change, to stop me at the border, given that I’m currently ahead of my repayment obligations, so good luck stopping me at the border. And even if that law change was made, given how lax the NZ border is, its not hard to jump on a yacht and head somewhere else.
    And given that we don’t stop benificiares, criminals, child support dodgers, mortgage holders, and others with debts from leaving the country, I don’t see it hapening anytime soon.

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  88. Falafulu Fisi (2,179 comments) says:

    Expensive study from a PhD student from UoA Department of Film, Television and Media Studies. The abstract of her latest publication is shown below. Her research is funded by her Bright Future Top Achiever Doctoral Scholarship conference fund, a Faculty of Arts Doctoral Research Fund grant, and several grants from the Department of Film, Television and Media Studies.

    Abstract

    Dorothy Arzner’s The Wild Party (1929) has been reclaimed for a lesbian cinematic canon, but it is only relatively recently that scholars have engaged more directly with the homoerotics of Arzner’s films, and the question of the representability of female homosexuality in late 1920s Hollywood classical cinema. This essay frames its engagement with these concerns in terms of The Wild Party’s generic history. Often claimed as instituting a new lesbian genre, the all-female college film, The Wild Party’s innovations can be more persuasively traced to its subtle transformation of an older, nearly exhausted genre: the flapper film. Expanding the film’s generic antecedents to consider the flapper as a discursive figure of 1920s American culture, I situate The Wild Party within developing modern female kinaesthetics and spectatorships, during a period in which Hollywood was also systematizing its commodification of femininity and the production of heterosexual romance narratives. If, as Patricia White has convincingly claimed, the representation of female homosexuality in Hollywood film is more often veiled by ‘the public sexualization of the female body’, then in the case of The Wild Party it is the excessively feminine and kinetic bodies of the flapper that screen – that is, both project and hide from view – lesbian desire as a new form of cinematic knowledge and pleasure. Rather than isolating certain scenes for their lesbian subtext or their resistance to a contemporary pathologized lesbian reading, I argue that the sexual intelligibility of such scenes is inseparable from the kinetic aesthetics of the flapper that Arzner harnesses to organisze the film’s visual schema.

    So, obviously, UoA has money to waste, but you often hear the Chancellor or members of the senate whinging in the media that the Govt doesn’t allocate them enough funding annually for research. Bollocks. There’s enough there to do useful applied research. Its just that they flush that money down the toilet with useless research such as the publication shown above.

    I would love to see Key and his Government to chop funding of University to the bone. In this way, our Universities will have no choice but to slim down and chopped useless departments and dropped useless courses. Universities are getting obese in their thirst for continual expansion with the establishment of useless (new) departments and running useless (new) courses.

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  89. Mark (1,489 comments) says:

    It would be interesting to know what percentage of students pay back their student loans at a higher rate than they are obliged to.

    Of note though if the repayments are going to increase to 11% or 12% then the fiscal effect is immaterial and the increase is more ideologically driven that budget driven. Sure another $10 to $20 million in payments could be better used elsewhere and we want the government to attack its overspending with vigour but compared to by way of example, increasing the pension entitlement to 67 this is tinkering.

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  90. Henry64 (83 comments) says:

    I graduated from the University of Canterbury in 2010 with a loan balance of $15,930.98 after interest write offs. I started repaying my loan while in my last year of study. I started full time work in Feb 2011 and on a salary of 47k have loan repayments deducted from my salary. I also make voluntary lump sum repayments when I can manage.

    As a result of making repaying my loan a priority after graduation, today my loan balance is $5176.40. Within the next 12 months I’ll have this loan repaid in full.

    Making excuses about not being able to afford to repay your loan because you’re a graduate is just that, an excuse. If you’re just on the repayment threshold, then it’s going to be difficult but not impossible. Be an adult and manage your affairs and make retiring debt a priority. Your student loan won’t go away by doing nothing.

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  91. Tauhei Notts (1,746 comments) says:

    Henry64
    Paying off interest free debt suggests that you are too dumb to attend an institution of higher learning.
    The fact that you graduated made me reach for that book by Sir Robert Jones, which I have on my shelves;
    “Degrees For Everybody”.
    The book was hilarious, but Henry64’s commercial nouse is nauseating.
    ………………………….
    Student Loans should never ever have been made interest free. Rather than increasing the repayment rate, the interest charge should be brought back. I get the impression that the reintroduction of interest on Student Loans would create more cash flow than increasing the repayment rate, or dropping the repayment threshold.

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  92. Henry64 (83 comments) says:

    I am over the threshold for repayments, so would be repaying it anyway. I don’t give a damn about commercial nouse, I’m doing what I signed on the dotted line to do.

    The taxpayer did their bit and loaned me the money, so naturally I pay it back.

    I’m not a total lost cause, I repaid a student loan back when they did have interest on them by being over the threshold income-wise too.

    I do agree student loans should never have been made interest free.

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  93. krazykiwi (9,186 comments) says:

    Interest free student loans were an outrageous bribe from a Labour government desperate to be returned for a third term. It worked, and we saw the mother of all spend-ups happen over that last term.

    I applaud the effors of students to reduce their loan balances, but remind them that they’ll be paying increased personal tax to fund that bribe long after their student loan debts are settled.

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  94. Maaik (33 comments) says:

    I went to uni in the evil South Africa. My parents could not afford to pay my tuition, so I had to make some choices:

    1) Study something that would make me worth something to a rich capitalistic company,

    2) Get them to pay my tuition fees (not an open-ended blank cheque),

    3) sign a contract that wouldmake me liable for all their costs plus interest if I failed to graduate or declined to work for them for the number of years that they paid my tuition,

    4) Live with my parents for another few years

    5) Continue my weekend job (Saturday mornings)

    6) Find another job (Friday and Saturday evenings)

    7) Forego any idea of OE, own car, drinking or smoking, holidays (I spend every uni holiday working for the firm that paid my tuition, and was very happy to earn some extra cash)

    The end result was someone with a useful degree, no debt, and an ability to value time and money that only comes from having to budget them.

    I would heartily endorse a system in NZ that gets the companies that eventually benefit from the educated employees to pick up the tab for their education. However, that would require some way to force people to honour their commitments (my contract would be unenforcable in NZ). It would mean we only get students to study things that are commercially viable – might stifle the creative arts a bit, but then they might do with some gagging.

    How many of the current batch of entitled students with $100K+ loans would be willing to make the decisions I had to make? I doubt if many of them want their education badly enough – in my day there was ZERO social safety net, so a degree was the only way to ensure you are employable. So now I am paying tax to subsidise Ph.D students who research bogans…..makes me want to spit.

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  95. graham (2,346 comments) says:

    Tauhei Notts @ 8:39 pm: “Henry64 – Paying off interest free debt suggests that you are too dumb to attend an institution of higher learning.”

    Thank you for sharing your complete lack of scruples with us. Do you really believe that smart people are the ones who find the best way to avoid repaying their debt?

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  96. Elaycee (4,404 comments) says:

    Tauhei Notts @ 8:39 pm: “Henry64 – Paying off interest free debt suggests that you are too dumb to attend an institution of higher learning.”

    I’m pleased that I’m not paying you for professional accounting services, SJL. Some people actually want to live in a debt free environment – you know, an environment where you pay your way as you progress through life. This means paying back personal debts as quickly as circumstances permit.

    I actually find Henry64’s attitude toward the repayment of his student debt, rather refreshing.

    You own attitude – not so…..

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  97. Henry64 (83 comments) says:

    Call me old fashioned I guess – I am in my late forties, so think I qualify.

    When I sign up to something like – a personal loan, student loan, hire purchase, mortgage – then I meet my half of the deal and pay back what I’ve borrowed. It works for me, in fact has worked for me as I’ve had all of the above.

    Regrettably, I’ve been a less successful saver/investor, but have addressed that over the past 10 years and made that a habit.

    If more people met their obligations then there’d be less of a problem. Overseas Kiwis in particular who have benefited from their tertiary qualification, gained at the generosity of the taxpayer should be coughing up.

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  98. blowmes (1 comment) says:

    f**k the nz government & the IRD dept ! Your crooks thats why we dont want to come home . Countries like Denmark etc have free study and they
    get a thousand a month for lliving .Not poxy Nz give you a 10 grand loan turn it into 40,000 over 15 years ! keep handing out thd dole though its allright, I hope you no the pressure it can cause our generation. Lets all be drones and do what the government wants……WTF

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