Students View Loan Freeze A Breakthrough.
‘Generation Debt’ views freeze to student loan interest rate as a breakthrough.
The Government's decision to set the student loan interest rate below market rates represents a major breakthrough in how the whole student loan problem is viewed the APSU Student Union said today.
The Minister of Tertiary Education, Steve Maharey, announced today that the government is reviewing how it calculated the student loan interest rate and, in the interim, it would hold the interest rate at 7% - below predicted 10 year bond rates.
"The decision not to link the interest rate to market rates, is, in our view, an acknowledgement that a student debt is fundamentally different from any other kind of debt," said APSU Student Union National President David Penney.
Since the student loan scheme was introduced in 1992, the interest rate has peaked at 9% in 1995 and averaged 7.9%.
"The decision to set the interest rate at 7%, instead of 7.6%, will not result in significant savings for student loan debtors. However, we do believe that we have now have a government that recognises student loans exist to serve social purposes, not economic purposes," said David Penney
The APSU Student Union has calculated that for an average polytechnic graduate who borrows $5,859 a year for three years (total debt $,20,498), the interest savings will be $123 for the 2000 year.
"We believe that government should and could go further and only charge inflation against student loan debts."
"We look forward to working with the Government and its planned student loan review to find further ways that the $3.44 billion student debt burden can be alleviated," concluded David Penney.