Teachers Celebrate Axing Of Interest On Loans
March 31, 2006
Teachers Celebrate Axing Of Interest On Student Loans
Teachers with student loans are celebrating the scrapping of interest on their loans which takes effect tomorrow.
People with existing student loans, or those who take out a new loan, will pay no interest from tomorrow, if they stay in New Zealand.
“We applaud this move to reduce the burden of student debt on new teachers and on people studying to become teachers,” says Irene Cooper National President of NZEI Te Riu Roa, the union that represents primary and early childhood teachers.
A survey of 841 teachers in their first and second year of teaching showed that 85% had student loans when they graduated and their average student loan debt was $16, 305.
The survey, “Teachers in Debt: A Report Card,” conducted by the NZUSA (New Zealand University Students Association) and NZEI Te Riu Roa, was released on April 27 last year.
A third of the new teachers surveyed said they planned to leave New Zealand after three years of teaching and that their student debt was the number one reason they were going overseas.
“Scrapping interest on student loans is good for indebted teachers and good for the country as a whole,” says Irene Cooper. “It will enable far more new teachers to stay in New Zealand where their energy and enthusiasm will benefit children in schools and early childhood education centres throughout the country.”
“Axing student loan interest also makes it easier for people to study to become teachers,” says Irene Cooper.
The NZUSA/NZEI survey shows that 70% of new teachers worked an average of 15.4 hours a week in part time jobs while studying, while more than half worked between 15 to 30 hours a week. Sixty per cent said this had an impact on their study.
Irene Cooper says not having to pay interest on student loans will also make it easier for new teachers to buy their own homes and save for their future.
Seventy one per cent of the new teachers surveyed said that their student loans made it difficult to save for their futures and that saving to buy a home was the major problem. A fifth of those surveyed said having a student loan made it difficult to borrow money for things like buying a home.
“We’re pleased the Government has acknowledged the student debt problems highlighted by NZEI and the NZUSA last year, by scrapping interest on student loans,” says Irene Cooper. “The Government now needs to address the problems we’ve raised concerning the repayment of loans.”
“This includes the need to raise the income level at which borrowers are required to begin repaying loans and introducing more flexibility into the repayment regime by taking account factors such as whether a borrower has children to support,” says Irene Cooper.
A new teacher with student loan debt
Frances is a second year teacher
at Rotorua Primary School who has a student loan of more
She's also a mother with four children. She worked as a teacher aide for four years then decided to qualify as a teacher. At the end of 2004 she finished three years of full time study and graduated with a Bachelors degree in Teaching and Learning.
She says scrapping interest on her loan saves her more than $40,000 and she will now pay her loan off in 13 years. If she'd had to continue paying interest it would have taken her almost 25 years to pay off the loan and she’d have ended up paying more than $72,000. That would have meant she would have been paying her loan until she reached retirement age.