Education Policy | Post Primary | Preschool | Primary | Tertiary | Search

 

National's Policy on Student Loans

11 July 2002

National's Policy on Student Loans: The Great Leap Backward

The National Party’s policy on student loans represents a great leap backward, according to Norman LaRocque, Policy Advisor with the New Zealand Business Roundtable.

The “you stay, we pay” policy, announced on Sunday by National Party leader Bill English, is not built upon sound public policy principles and would represent a waste of taxpayers’ money. It is no substitute for creating an economic environment that provides graduates with opportunities that encourage them to stay in New Zealand, according to Mr LaRocque.

Mr LaRocque said the policy is likely to have only a minor impact on its apparent goal of reversing the brain drain given that some students may defer the timing of their departure for overseas, rather than reduce the amount of time they spend overseas. "It would also lead to a further increase in student loan borrowing as students recognise they are being offered half-price dollars. The policy would also lead to inequities in the treatment of students and would be difficult to implement," Mr LaRocque said.

"Even if the policy was successful in reducing the brain drain, it will do so only at a very high per-student cost to taxpayers (who represent the “we” in “you stay, we pay”)," Mr LaRocque said. "This is because loan write-offs cannot be limited to those who would have left in the absence of such a write-off. The proposed policy is tantamount to using a garden sprinkler, rather than a watering can, to water a pot plant – while both get the job done, one wastes a lot more water in doing so," said Mr LaRocque.

The “you stay, we pay” policy would extend the current government’s policy of softening the student loans scheme, thus increasing taxpayer subsidies to tertiary education. Additional taxpayer subsidies are not warranted given that:

· tertiary education is already heavily subsidised (much more so than other levels of education) and subsidies are much higher than can be justified on mainstream public policy grounds; and

· spending on tertiary education tends to benefit people who, on average, come from better off backgrounds and also go on to earn higher incomes after graduation, rather than the poor.

Mr LaRocque said National's approach confuses two separate issues: the proportion of tuition costs that students should pay (currently around 25 percent on average) and the means of funding the tuition they must pay. The debate about taxpayer assistance should focus on fee subsidisation not on the loans scheme, the terms of which should be kept as close as possible to commercial terms - otherwise it will be exploited for purposes for which it is not intended. Recent experience with the interest rate holiday provides graphic evidence of this.

As Don Brash recently pointed out in 'The Listener' (13 July, 2002), tertiary education is an asset that enables students to earn higher incomes and the student loan scheme treats them favourably relative to people with debt in other sectors.

The opportunity cost of spending hundreds of millions of dollars on a low priority area such as this – for little gain – is significant, said Mr LaRocque. "The policy would do nothing to address legitimate policy challenges in the education sector generally or in the tertiary sector specifically. For example, a more highly subsidised student loan scheme would not widen tertiary education access for students from disadvantaged backgrounds, spur research and innovation or lift quality of delivery in the sector," he said.

The priority in student loan policy should be to reverse recent changes such as the interest rate holiday, as recommended by the government’s own Tertiary Education Advisory Commission, said Mr LaRocque.

"An ambitious country does not need half-baked taxpayer-funded bribes to encourage its graduates to stay and seek prosperity," Mr LaRocque said. "Political parties should focus on creating an economic environment that encourages graduates to stay in New Zealand – by lowering taxes, reducing regulatory burdens on businesses and modernising archaic, state-dominated sectors such as health and education," he said.

Norman LaRocque
Policy Advisor
Web: www.nzbr.org.nz

© Scoop Media

 
 
 
Culture Headlines | Health Headlines | Education Headlines

 

Reuben Moss' Property is Theft! & Kaitani at The Physics Room

Property is Theft! continues Moss’ interest in the contemporary urban environment as a space controlled by pulsing and unequal flows of capital and labour. Kaitani features work by the University of Canterbury Fijian Students Association and Kulimoe’anga Stone Maka. More>>


Handcrafted Form: Rare Treasures From Japan

This unique exhibition at Expressions Whirinaki represents 90 everyday objects made by contemporary Japanese artisans who employ various traditional craft techniques made in regional workshops. The works used in daily life are crafted from raw materials with techniques appropriate to bringing out the best of its medium, balancing ease of use with aesthetic appeal. More>>

Howard Davis Article: A Musical Axis - Brahms, Wagner, Sibelius

Brahms' warm and exquisitely subtle Symphony No. 3 in F major, Wagner's irrepressibly sentimental symphonic poem Siegfried Idyll, and Sibelius' chilling and immensely challenging Violin Concerto in D minor exemplify distinct stages of development in a tangled and convoluted series of skirmishes that came to define subsequent disputes about the nature of post-Romantic orchestral writing well into the following century. More>>

Scoop Review Of Books: A Pale Ghost Writer

Reviewed by Ruth Brassington, Richard Flanagan's new novel is about a novelist hastily ghost-writing the biography of a crook about to go to trial. The reader is kept on a cliff-edge, as the narrator tries to get blood out of his stone man. More>>

New Zealand Wars Commemoration: Witi Ihimaera's Sleeps Standing Moetū

The second of several articles to mark Rā Maumahara, remembering the New Zealand Land Wars. The first was a Q&A with Vincent O’Malley, author of The Great War for New Zealand: Waikato 1800–2000. More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • CULTURE
  • HEALTH
  • EDUCATION
 
 
  • Wellington
  • Christchurch
  • Auckland