NZUSA 'Not Achieved' on Cost of Student Debt
13 SEPTEMBER 2014
Responding to NZUSA President Daniel Haines’ claim the cost to taxpayers of forgiving student debt is only $8 billion, Taxpayers’ Union Spokesman Ben Craven says:
“Mr Haines' quoted figures might hold more credibility if he wasn't contradicted by his organisation's own homepage."
"Treasury's PREFU document shows that student debt has risen from the $13.5 billion to $14.2 billion. The $13.5 billion figure is quoted on the NZUSA's homepage."
"It’s a nice try by the NZUSA to use a discounted value, but the fact remains that forgiving student debt would cost $8,374 per household.”
“In addition Mr Haines claims that repaying a debt is a tax. In fact, the tax is on the middle income earners who pay the interest on his degree, while he reaps the rewards of a subsidised tertiary education.”
“A student loan represents a choice made by an individual to accrue debt in the short term in order to better their employment prospects in the long term and, in turn, their earning potential. As ridiculous as the suggestion that all student debt would be wiped, is NZUSA's inference that Kiwis' mortgages, hire purchase payments and monthly credit card bills are taxes too.”
Q & A
What’s the difference between the $8 billion and $14.2 billion value of student loan debt?
The lower figure is the ‘fair value’ (or the recoverable amount) used in the government’s accounts for the value of the student loan book. It fluctuates with policy settings and includes, for example, the discount due to the fact that students are only forced to pay the money back as they can afford it. The current year and forward estimates for both the outstanding debt and the fair value are given on page 101 (note 13) of the Pre-election Economic and Fiscal Update. More comprehensive information on Student Loans, including nominal debt and carrying value are available from the Ministry of Education website: http://www.educationcounts.govt.nz/publications/80898/2555/student-loan-scheme-annual-report-2013
Media are also welcome to contact Dr Michael Dunn of Economic and Fiscal Consulting Limited, whom the Taxpayers’ Union has engaged to provide independent advice for theTaxpayers’ Union ‘Bribe-O-Meter'.
Why did the taxpayers' Union use the $14.2 figure?
$14.2 billion is the estimated nominal value (including accrued interest) of all student loan borrowings. It is the figure that the NZUSA usually use in publicly and advocacy for 'the burden of debt'. The amount represents $8,374 per household.