A lifetime of debt?

October 20th, 2010 at 11:00 am by David Farrar

Elizabeth Binning at the Herald reports:

Angry students say they will be left with a “lifetime of debt” following Auckland University’s decision to raise its fees by 6.3 per cent next year.

A lifetime? Really?

The increase, which was approved at a meeting this week, means some domestic students will have to pay up to $1600 extra in fees, in addition to $660 in student services fees and building levies.

If fees have gone up 6.3% then how can cflunkan some students be paying $1,600 more unless their annual fees were already $25,000 a year?

Most degrees are priced at just under $5,000 a year. So a 6% increase is an extra $300 a year. For a three year degree, that is an extra $900 of debt.

The median income for a graduate is $1,055 a week, so they will be paying off the loan at around $105 a week.

So in fact this “lifetime of debt” means an extra two months paying off the student loan!

And in case the student association flunkies try and claim they mean the total level of debt, not just the additional debt, I quote from the student loans annual report:

The median repayment time for those who left study in 2006 and remained in New Zealand was three years 11 months

Maybe they mean a lifetime of debt if humans were rats and only had a life expectancy of four years!

National’s Health Bonding Policy

September 19th, 2008 at 7:00 am by David Farrar

National has released a policy to incentivise doctors, nurses and midwives to stay in New Zealand, and even No Right Turn likes it.

Policy details are:

  • Voluntary bonding with student loan debt writeoffs
  • Will apply to those willing to work for three to five years in hard to staff communities or specialities
  • A maximum annual write off of $10,000 per annum
  • $30,000 written off (if at maximum rates) after year three and then $10,000 a year for the next two years if they stay on.
  • Will apply to anyone who graduated from 2005 onwards
  • Will be extended to other health professionals over time
  • Cost is initially $3 million in year one expanding to $9 million in year three which covers 100 doctors and 250 nurses and midwives.

Med Students like debt relief bonding

May 28th, 2008 at 11:25 am by David Farrar

Both the NZMA and the NZMSA are applauding the concept of giving debt relief to medical graduates in return for them working in rural areas.

New Zealand Medical Association (NZMA) chairman Dr Peter Foley said he supported the idea, adding that debt relief for graduates would be a powerful tool for retaining a junior doctor workforce being tempted by pay conditions in Australia.

The New Zealand Medical Students Association (NZMSA) also applauded Key’s bid to address the loss of young New Zealand doctors overseas.

I’m glad the policy seems to be using the carrot of debt relief rather than some sort of stick which would try and stop doctors from leaving against their will.

The challenge will be how fast to write off any debt. Do it too fast and then you may just delay the departure. Do it too slow and you mat not have enough of an incentive.

It is worth remembering that writing off $10,000 debt is equal to giving someone $16,400 before tax due to the high 39% marginal tax rate on income for doctors.