Student loan savings

September 7th, 2012 at 9:00 am by David Farrar

Stuff reports:

The Government has squeezed hundreds of millions of dollars in savings from the student loan scheme through a series of changes.

Tertiary Education Minister Steven Joyce and Revenue Minister Peter Dunne today announced the write-off on had fallen to 39 cents in every dollar borrowed.

It had been about 48 cents in every dollar when the former Labour-led Government took interest off student loans, Joyce said.

”When we came into government, we committed to get that cost down and initially targeted getting it under 40 cents in the dollar,” Joyce said.

“I’m pleased to be able to say that changes over the past three budgets have helped reduce that cost from 48 cents to 39 cents in the dollar so far. 

That’s good At 48% write-off, the loans scheme was approaching becoming an ATM scheme. The idea of having loans is that they get repaid. It costs the Government money to borrow, to loan it in turn.

Hopefully over time the proportion written off will fall below a third.

 

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25 Responses to “Student loan savings”

  1. hubbers (142 comments) says:

    Do you think the people pushing for free student loans were really after free education via the back door?

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  2. Hamnida (905 comments) says:

    Student loans are a regressive tax measure aimed at low to middle income New Zealanders.

    It is time all existing loans and the scheme itself disappears from New Zealand’s education and socio-economic sphere.

    All New Zealanders should have equal access to tertiary education regardless of parental wealth.

    Abolishing the scheme will also result in more New Zealanders staying in New Zealand instead of leaving for overseas jobs.

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  3. Manolo (14,082 comments) says:

    Abolishing the scheme will also result in more New Zealanders staying in New Zealand instead of leaving for overseas jobs.

    Yeah right. The number of “graduates” in Political Science, Sociology, Drama, Women & Maori Studies will also skyrocket. Ah, those valuable professions NZ desperately needs.

    There is no free lunch: if you want to study something, you pay for it.

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  4. KH (695 comments) says:

    40 % is shocking and a national disaster. Somebody should be locked up for sheer incompetence.
    In my view 4 % even would still be shocking.
    This is not a negative comment on Steven Joyce.
    He is doing a reasonable job on this within a national culture of incompetence.

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  5. Martin Gibson (247 comments) says:

    When I was in my first year of uni in 1990 I got a student allowance.
    In the second year the student loans scheme was introduced — I was 18 or 19, and like most 18 or 19 year olds, I didn’t really know shit. The loan was sold to me and others as something I would hardly notice, something I would be paying out of my fabulous wealth in later years. My first purchase was a bottle of Jim Beam. It was like magic money, but it ended up costing me $1000 a year.
    Like many young people I racked up $40k+ of debt — and debt became my default financial position — like an alimony payment for a child I was too young to think carefully about conceiving.
    Looking back, the young people my age at the time were just one more thing to privatize.
    I don’t dispute that I should have paid for my education, but I know so many young people who delayed having kids, who became comfortable with ill-informed debt, who extended their adolescence into their 30s as a result of that soft-sell albatross around their neck.
    In my mid-30s,I knuckled down (and got some money off my grandparents’ estate) and paid it all off, finally getting back to not owing anyone (but my parents of course) anything for the first time since my late teens. Then Hulun made the loans interest-free in a bid to win the election — turns out I needn’t have bothered.
    I put it down to experience, bought a house got married and had a child. Things I now realize I should have done in my mid 20s.
    Now at the age of 40 I am finally making financial headway, and listening with weary interest to all the moronic suggestions of Hamnida and his/her mates for spending the money I am making and bracing for New Zealanders to be stupid enough to vote in their Maoist bloc of horror.
    I know I am going to have to pay for the retirement of the Babyboomers who sold me then I’ll get fucked all over again when I retire myself.
    The lessons I learned for my $40k?
    1. If you have the right to print currency, you care not who makes the laws.
    2. It’s so much easier to spend money you didn’t earn.
    3. Young people need benevolent guidance from people other than their parents and teachers.
    4. Climate changes whether people burn coal or not. (At least I studied science rather than Women’s Studies)
    It’s great to live in NZ though, and I hope my generation can find the strength to off-set all the ethyl lead the Boomers breathed in.

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  6. bringbackdemocracy (428 comments) says:

    Student loans are effectively, the Government being involved in the banking industry.
    For Joyce to say he’s happy that they get 61cents back from every dollar they lend shows why Government is useless at running a business.
    Most MPs would struggle to run a lemonade stand.

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  7. KiwiGreg (3,260 comments) says:

    “Tertiary Education Minister Steven Joyce and Revenue Minister Peter Dunne today announced the write-off on student loans had fallen to 39 cents in every dollar borrowed”

    Thats a subsidy scheme not a “loan” scheme with that level of write off. Seriously are 39% of students either not getting jobs earnign over $20k or fucking off overseas? How can the write off rates be so high, it must be (graduate) student fraud causing this.

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  8. trout (945 comments) says:

    Can some one please explain why student loans are written off when a borrower dies and not a charge against their estate? We went through a period when large numbers of retired folk were encouraged to take out student loans and embark on tertiary study as part the drive to boost student numbers and govt. funding. There was no prospect of repayment.

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  9. Redbaiter (9,657 comments) says:

    Just another un-affordable socialist trick among so many. A selfish and hurtful device to buy Labour the power they always lust after.

    There are a thousand good arguments for doing away completely with loans and National should articulate those arguments and end this dishonest and deceitful charade.

    They won’t do this though for

    (1) they can’t make an argument to save themselves and

    (2) they haven’t got the spine to end it and

    (3) they’re quite happy to continue the fraud that the loans scheme is because it brings them a few votes.

    KH is right. Everyone involved should be locked up, if not for deceit and dishonesty, at least for utterly unbelievable incompetence.

    With Helen Klark being the first one into a jail cell.

    (If the SFO looked into this they’d find plenty to occupy their prosecutors, but of course they only exist to harass the private sector)

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  10. krazykiwi (9,186 comments) says:

    Why the Education Bubble Will Be Worse Than the Housing Bubble. Watch the embedded video part way down the page.

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  11. cha (4,084 comments) says:

    # kk

    http://pjmedia.com/instapundit/?s=higher+education+bubble

    http://vimeo.com/15821943

    http://www.villagevoice.com/content/printVersion/3638912/

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  12. artemisia (256 comments) says:

    KiwiGreg, 39% relates mainly to the cost of interest free (cost of borrowing to fund this) and administration, not to non payment by 39% students (though non payment is presumably part of the writeoff).

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  13. rg (214 comments) says:

    National by supporting the interest free student loan bribe is complicit in the bribe. Interest free loans distort things too much, a low interets loan would not have the same distortion. It is a pity we have such a weak govt.

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  14. Hamnida (905 comments) says:

    It is time to end the student loan train-wreck once and for all.

    This is a system invented by people who paid nothing for their tertiary education.

    Move New Zealand forward by eliminating this form of personally targeted debt.

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  15. Ryan Sproull (7,288 comments) says:

    I’m very grateful not to be paying interest on my loan and very happy to stay in New Zealand to receive that perk.

    I am currently… about 12 months from being student-loan-free from the 10% repayments coming out of my salary. I’ve been paying it off full-time for five years now.

    One psychological effect student loans in general had on me while I was studying was that I several times enrolled in courses which I then just gave up on (partly due to work commitments) and didn’t give it much thought because Future Ryan was going to pay off all that stuff. That was true of me before and after interest-free came into effect, however.

    I would like to see free (read: taxpayer-funded) tertiary education in New Zealand, including those pure academic studies that it’s so politically correct to condemn. However, to ensure it wasn’t being abused, it would have to be keyed to success in those studies, as some European countries do, I believe. That is to say, someone who consistently puts in the hours and has the talent and gets A grades throughout would continue to receive free education, while those who either don’t apply themselves or lack talent for the studies would have to pay.

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  16. Manolo (14,082 comments) says:

    National by supporting the interest free student loan bribe is complicit in the bribe.

    Ask Neville Key and he’ll admit that to be the case, but will go on to say he cannot change because the electorate is against it. What a principled PM we have!

    Labour lite is as bad and dishonest as Helen’s guys, gals and gays.

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  17. dime (10,134 comments) says:

    Hamnida – we get it. you’re young. you’re poor and you’re jealous. bummer.

    “All New Zealanders should have equal access to tertiary education regardless of parental wealth. ”

    Please give us examples of new zealanders who dont have access to tertiary study. Apart from the ones that are too thick to qualify.

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  18. Hamnida (905 comments) says:

    I know no “new zealanders” (sic).

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  19. dime (10,134 comments) says:

    666 posts of garbage. well done.

    allow me to write your 667th post

    “its not fair wah wah wah some people are rich wah wah wah poor people should get free stuff wah wah wah”

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  20. Griff (8,203 comments) says:

    Dont forget dime moari are treasures wah wah wah

    how is that possible hamywritesthedumbistshit dont you know any one? or are you a troll from parts far away?
    Is that why you post on here lonlyness

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  21. B A W (100 comments) says:

    My changes to student loans

    1) Repayment test – will you be able to pay it back (life expectancy or guarantor, or security)
    2) Do you need it test – if you have money in the bank, or equity in the house you will need to use that first
    3) Kiwisaver student loan diversion – divert employer and member tax credits from Kiwisaver to student loan thus speeding up the time it takes to repay. Why earn interest on the government contribution to kiwisaver when it is losing on the money going into student loans.
    4) If you go overseas and don’t repay then your new passport will only be valid for 9 months (which will cause real havoc).

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  22. Redbaiter (9,657 comments) says:

    My changes to student loans-

    Get the gummint to fuck out of education and privatise it completely.

    Public education was once a good idea but since the left have perverted that idea to their own political ends it is nowadays plainly and completely unworkable.

    http://pjmedia.com/blog/zombies-how-the-left-captured-academia-the-media-and-other-organizations/

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  23. RRM (10,034 comments) says:

    Public education was once a good idea but since the left have perverted that idea to their own political ends it is nowadays plainly and completely unworkable.

    Indeed – in fact I always detail my ductile beam-column joints with LEFT-HANDED bolts, so complete is the socialist indoctrination a NZ education provides… :-P

    Yawn – Wedbaiter’s revelations: the Elephant in the Room, or just the Harp at the Party?

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  24. mavxp (492 comments) says:

    It’s a difficult one. On the one hand, I probably would not have gone to university had it not been subsidised (to the tune of 75%), and student loans had not been available to pay the rest and cover my living costs (in the late 90’s it was with interest at just below market rates -around 6 or 7% off memory). I had saved up around $5k from part time work during the 90’s (at $4-6/hr) but that went quickly on my accommodation in my first year. Reality Bites.

    On the other hand, neither would most other lower-middle class people, so it would do a few things:

    * increase the rarity value of tertiary education back to what it was when my parents were growing up in the 60’s. Super smart kids would get scholarships and rich people or self-funders with balls/ determination would do it.

    * make most ordinary jobs that now have tertiary graduates working them (e.g. PA’s, technicians, etc), accessible to people who don’t have degrees and frankly can happily learn it on the job.

    * Technical colleges with part time courses enabling training while working would come into their own.

    * give me another 6 years in the workplace I won’t have back.

    As well as other bonus effects like lower taxes, and more people willing to start a family while younger instead of waiting until they are in their mid-late 30’s. Reducing the “breeding duller” situation we have currently.

    Still my life is better for having gone to uni. Sure the country is screwed, but hey I can always jump ship like everyone else when NZ lists over and takes on water like Greece, Portugal or Ireland ;)

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  25. adam2314 (377 comments) says:

    Martin Gibson (154) Says:

    1. If you have the right to print currency, you care not who makes the laws.

    One of the Rothchilds said many many years ago..

    Give me control of a countries money and the government can pass all the laws they want to..

    Have not heard much about the Rothschilds or their now Partners ( May 2012 ) Rockefellers during the GFC.

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