Cheaper To Get A Home Than A Student Loan
The New Zealand University Students’ Association (NZUSA) is calling on the Government to lower the interest rate on student loans in light of today’s announcement that the interest rate will be held at 7% for the third year in a row.
“NZUSA believes the Government should only charge interest at the rate of inflation as a way of moving towards charging no interest on student loans at all. Such a move would bring New Zealand in line with the Australian system which only charges for the cost of inflation”, said NZUSA Co-President Charlie Chambers.
“While we appreciate the government not increasing the current interest rate, 7% remains a significant contributor to the $5 billion of total student debt. By not decreasing the interest rate the government is doing little to alleviate the long repayment times faced by graduates already burdened with large loans”, said Chambers
“Graduates overwhelmingly cite the high rate of interest as an impediment to repaying their loans. In a survey of teacher graduates conducted by NZUSA last year the high interest rate was identified as their major concern and the component of the loan scheme they most wanted to see changed”, said Chambers.
Historically the interest component of the loan scheme has been of concern to student groups. In the lead up to the last election, students highlighted the inequities of a loan system that often charged interest above that charged by banks.
“The current floating interest rate for home loans is 6.7% with the government’s own bank, KiwiBank charging 6.1%. If Banks are able to lend with lower interest charged for people to purchase houses, we can’t understand why the government has to charge so much for New Zealanders seeking an education”, said Chambers.
“NZUSA will be pressuring the government to make wholesale changes to the current interest rate calculations in their May discussion document on the student loan scheme”, said Chambers.