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Ignore Unions and Leave Loan Scheme Alone

20 October, 2004

Maharey Should Ignore Unions and Leave Loan Scheme Alone

The Associate Minister of Education (Tertiary Education) Steve Maharey's comment on National Radio this morning that further changes to the student loan scheme might be in the offing should be of great concern to those who support sensible and forward-looking tertiary education policies, said Education Forum policy advisor Norman LaRocque.

"It is important to remember that the Minister's last major change to the student loan scheme - the abolition of interest while studying - was an abysmal and expensive failure, costing taxpayers hundreds of millions of dollars, inflating the stock of student debt outstanding and doing absolutely nothing to improve quality or participation in tertiary education", Mr LaRocque said.

The Ministry of Education's own figures, released at the time the change was made, showed that the abolition of student loan interest while studying - a move designed to reduce the amount of student loan debt outstanding - would instead increase the amount of student loan debt outstanding by 33% by the year 2020.

"There is no justification for making the scheme even more generous. Doing so would simply transfer an even greater share of the burden of financing tertiary education away from students, who are its direct beneficiaries, to taxpayers - who already foot an estimated 70% of the cost of tuition.

"There is certainly no justification for abolishing the student loan scheme, as suggested by the New Zealand University Students' Association (NZUSA). Indeed, the student loan scheme report for the year to June 2004, released yesterday, makes a mockery of the NZUSA's 'Chicken Little' scare campaign", Mr LaRocque said

"Instead of making the student loan scheme more generous or abolishing it, as demanded by the NZUSA, Mr Maharey should reverse his earlier failed policy changes - like the abolition of interest while studying - and close the door on further backward moves. It is high time he stood up for the national interest and told the Jurassic, rent-seeking student associations to 'move on'", concluded Mr LaRocque.


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