They’re loans not gifts

Student loans might be interest free while studying and for those who stay in New Zealand afterwards but they’re not gifts.

They are required to be repaid and, for those who go overseas, with interest.

Tightening up the rules around who gets a loan, how much they can claim and the requirement to repay it is long over due.

People who with overdue fines are stopped at the border if they try to leave the country. There would be an uproar if people with student loans were treated that way but when the 15% of those with loans are overseas and owe 55% of the debt they are an obvious target for tighter rules.

Suggestions by Tertiary Minister Steven Joyce are reasonable. Giving those who’ve had loans and go overseas a three year holiday before they’re required to start repayments is far too generous:

. . . we have this thing called the three-year repayment holiday right now, which the previous government started, which seems to have been a pragmatic decision that they made that they weren’t collecting it anyway, so let’s pretend that we won’t collect it. I’m concerned about that. I think it sends the wrong message that somebody can sit overseas for three years and not make any commitment at all towards repayment. Now, when you go on your OE, perhaps you go six months or a year without getting an income, but, actually, once you’re over there for about a year, you’ve got to be living on something, and we’re thinking that we might change the length of that repayment holiday. . .

. . . Everybody who goes overseas automatically gets it, and I’m thinking maybe we’ll look at something like an application requiring them to leave a contact in New Zealand, for example, and actually limiting the period of time to a lot less than three years.

 Using debt collection agencies and recalling the whole loan if people ignore requests to make repayments; and allowing people over 55 to take loans for fees but not living costs is also sensible.

Interest-free student loans was an election bribe before the 2005 election. It was one of the dead rats National swallowed during the 2008 campaign.

Swallowing it doesn’t mean the government can’t tighten the rules to make it a bit easier to digest.

These changes will do that, saving money without imposing unreasonable costs on graduates.

10 Responses to They’re loans not gifts

  1. pdm says:

    For the last 6 months I have been baiting the diehards over at Red Alert about them getting below 20% on election day. It looks like I might be on track.


  2. gravedodger says:

    AFAIK any bank making a loan with the appalling lack of security, we as taxpayers are with student loans, would require a watertight guarantor so why doesn’t the lender in this case, oh thats right it wasn’t a loan it was a government sanctioned bribe. Remind me again what is the legal status of a bribe by government as opposed to a bribe of someone in the government? just asking.


  3. pdm says:

    Apologies HP – I stuffed up with the above on the wrong thread.


  4. Michael M. says:

    The whole interest free student lone scheme is lunacy.
    Lunacy and Vote buying, started by the Communist Labour Government to stay in power, endorsed and perpetuated by this National Socialist Government.
    It is lunacy and the road to bankruptcy to borrow money at up to 8% and and lend it with out any collateral or guarantee at 0%.
    Yes some of this money was borrowed at eight %.


  5. robertguyton says:

    pdm said “For the last 6 months I have been baiting the diehards over at Red Alert…”


    Have you!


  6. Suppose ,after the three year “make whoopee” period was up, we required repayments as a condition for the renewal of a NZ passport?


  7. homepaddock says:

    GD – you can ask but don’t hold your breath for an answer.

    PDM – No problem, I realised that and was oging to remove it but now that Robert has referred to it will leave it be otherwise his comment doesn’t make sense.

    Michael M – I agree but students, their parents and granparents who make a sizable voting block like it even if it is lunacy.

    James, that’s tempting.


  8. Inventory2 says:

    Hooray! Robert emerges from his self-imposed exile of OPB’s (Other People’s Blogs)!


  9. Michael M says:

    Liking as children like lollies, buying votes is corrupt.
    It is time we grew up as a nation.
    Socialism failed in eastern Europe just as it is failing here.


  10. homepaddock says:

    Micahel – I agree but once policies are set in place it’s very difficult to reverse them.

    However, is it too much to think more people are beginning to understand that borrrowing to spend on luxuries as we’ve been doing can’t continue and saving, investment and export-led growth is what we need?


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