The fairness of student loan caps

Stuff reports:

After losing several family members to cancer, Freeman Apou was inspired to pursue a career in oncology. 

But the medical student’s dream of being able to treat those struck down by the disease hangs in the balance after he reached the lifetime student loan borrowing limit.

The 31-year-old University of Auckland third year student is having to crowd-source to come up with his $20,000 a year in tuition fees.

With six years of undergraduate study in the form of a conjoint degree in genetics and English under his belt, Apou has hit the student loan borrowing limit.

He had applied to health sciences while completing his undergraduate degree but was unsuccessful, and was told to reapply for postgraduate entry. 

Under the current scheme, students can borrow the equivalent of seven years of fulltime study, plus a one-year extension available to medical students.

Apou seems like he will be a great doctor. And he has come up against a policy probably not entirely aimed at him. But policies around loans are about balancing fairness to students and fairness to the taxpayers.

Before any limit was introduced, there were some students who would just enrol year after year chalking up a huge loan balance that they would never pay back. Apou is obviously not one of those but nevertheless one can argue that eight years of subsidised loans is pretty generous.

To complete his medical degree, Apou would need to pay for the remaining years of study himself – at a cost of around $20,000 each year for two years – something he says is almost impossible to achieve. 

That’s on top of his current loan balance of $112,000. 

Apou has tried to save as much as possible working part-time at a cancer treatment centre, but says the reality is he doesn’t earn enough to cover tuition himself.

“It becomes an equity issue when people of higher affluence are able to complete their degree, but those of us who don’t come from those backgrounds can’t afford to continue.”

He’s prepared to take a year off to save, but said doing so would distance him from his goal.

Can’t criticise his work ethic. But is there really no choice other than charity? He appears to have had a nine year break between school and tertiary study so there may have been an ability to save while working then. But to be fair few save a lot when they enter the workforce.

What I wonder is if he has tried a commercial loan? He is training to be an oncologist and a trainee oncologist gets paid between $70,000 and $175,000 a year while an experienced oncologist gets between $175,000 and $600,000 a year. A bank may well be willing to loan in anticipation of future earnings.

Anyway you can donate to him here.

As I said he does seem to be stuck in a hard place, but I fear abolishing the eight year lending limit will incentivise some students (not Apou) to stay permament students rather than leave university and get a job.