Student Loans

The SST also has an article on student loans.

It quotes a medical student with a $75,000 loan (which is four times the average – one never sees interviews with people with average balances) saying the student loan calculator has said she will take 50 years to pay off her loan, and there will be $300,000 interest.

This seemed high to me. So I went to the calculator and stuck in figures that 1st year income will be $50K and in 5 years would be $100K. This may be too much but as a starting point it said (assuming one was born in 1980) that the loan will be paid off in 15 years and interest will be $42,000.

An extra $20/week repayment, over the minimum would see the loan paid off in 12 years and interest shrink to $32,000.

I wondered how low the salary would have to be to get this 50 year repayment. A start salary of $40K and $80K in 5 years has 20 years repayment and $54,000 interest.

A start of $30K and $60K in 5 years has a 29 year repayment with $70,000 interest.

If one assumes a junior doctor earns $25,000 and in five years will only be on $50,000 (last DHB survey had average medical officer who is not a specialist on $100,000) then one gets a 36 year repayment and $80,000.

I can’t see how one gets a 40 year repayment with $300,000 interest as asserted in the SST.

Also the article repeats the assertion that one has to pay off the debt before one can have children. If you drop out of the workforce for a few years (for any reason) then your loan balance doesn’t increase one cent in real terms. It only rises in line with inflation, thus staying the same in real terms.

Personally I have sympathy for medical students who like Charlotte Oyston do have $75,000 loans. The costs of doing medicine do not align with their future income very well. If I was to change tertiary funding, medicine is one of the areas I would target. However the situation is not as grim as the article makes out, by a long long way.

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