Joyce looks for loop holes in intrest-free loan promise
Mister for tertiary education Steven Joyce is looking at ways to change student loan administration fees without breaking National’s promise to keep loans interest-free.
Earlier this month Joyce floated the idea of an annual $50 charge to all former students with an outstanding loan. This would affect around 500,000 New Zealanders.
Currently students pay a $50 administration fee only for each year they take out a student loan.
Green Party associate tertiary education spokesperson Gareth Hughes said it was unnecessary to charge those who were already making repayments with an unavoidable extra fee.
“The Minister knows he can’t mess with the popular interest-free loans policy, so he’s trying to get around it by charging interest by stealth,” Hughes said.
Joyce has suggested several changes since taking on the tertiary education portfolio including; funding based on individual performance, the introduction of a lifetime limit of access to student loans and requiring permanent residents and Australians to wait two years before getting loans.
Changes would result in savings which would then be recycled to make way for more student places in our universities and polytechnics, said Joyce
More definitive changes to student loans would be announced in the up-coming budget.
"The changes we are looking at are about commonsense and fairness. It's sensible, for example, that borrowers should cover the cost of administering their loan, but the current administration fee covers about 20 per cent of the costs and only applies while students are studying and drawing down their loan,” said Joyce.
"If loan borrowers pay something towards the cost of running their loan account, that means more tertiary opportunities for somebody else."
Hughes agreed the size of New Zealand’s student debt was a concern, but trying to circumvent the interest-free policy through the backdoor wasn’t the way to address it, he said.
“Unfortunately this Minister’s other decisions, like signalling fee increases for courses such as medicine and linking tertiary funding to pass rates, are all taking us in the wrong direction,” said Hughes.
See Steven Joyce's release HERE
Fee would cancel out voluntary repayment bonus
New Zealand Union of Students Association (NZUSA) co-President David Do says a $50 administration fee would wipe out the current voluntary repayment bonus on student loans.
The current government implemented a 10 percent voluntary repayment bonus to enable more young people to become debt free earlier and make loans easier to pay off.
“If a borrower pays $500 to get the 10 per cent bonus, this $50 account fee will snatch that away. This is a backwards step that will affect hundreds of thousands of New Zealander and make it harder for them to pay off their loans,” said Do.