Otago University Vice Chancellor Sir David Skegg wants the government to consider charging a little bit of interest on student loans.
Otago University was in the same situation as others in New Zealand. It was doing everything it could to increase income and balance the books to avoid staff redundancies, Prof Skegg told a university council meeting yesterday.
“These are testing times for universities. What I am saying is perhaps a little bit of interest [should be added] to student loans… so the Government can fund universities more and we can keep our tuition fees down.
If the question is, what is the best use of public funds for tertiary education?, interest free student loans aren’t the answer.
They’re too expensive for the taxpayer and they fund a greater quantity of students rather than a better quality education.
They also make education more expensive. Money spent on interest free loans is money not available for funding universities which, as Otago did yesterday, have to increase fees and levies. That means students then have to borrow more.
That’s not good for them as individuals and it’s not good for us as a country.
There is no such thing as free education.
I was one of the generation who paid almost nothing for my university studies but tax rates were up to 66% to fund that largesse.
Students forget most of them are at university or polytech for only three or four years and spend the rest of their lives paying tax.
They, and the rest of us, would be better off if they received less while they’re students and paid less tax when they graduate.
They’d also get a better education because at least some of the money which now goes to interest-free loans could be spent on improving the teaching.
Bonding graduates rather than indiscriminately funding students would be much better use of scarce public funds.
That way money would go to people who graduate and stay here to work, not just anyone who starts studying at a tertiary institution who may or may not complete their studies and may or may not work in New Zealand when they graduate.
It might also do something to correct the imbalance we now have with many more graduates in media and communications than in agricultural science. More of the latter would be much mroe likely to add to economic growth which in turn would make more money available for education.