Nick Smith

Opposition Education Spokesperson

24 February 2000

Labour's student loan policy backfiring

Opposition Education Spokesperson Nick Smith today said Labour's pre-election pledge to reduce student debt had backfired given the huge 45% increase in student loan applications revealed by the Government yesterday.

"Labour and the Alliance have screamed blue murder for three years over the level of student debt. It was inevitable that their interest-free policy is now enticing students to get even more in debt. WINZ has forecast that over 45,000 more students will take out loans in the first term this year than was forecast under National's policy.

"Students would be crazy to say 'no' to free money. Some students are using the loan scheme to enable them to invest in interest bearing accounts. I am also hearing of many well-off parents who are now telling their children to take out loans rather than assisting them with their education costs.

"There is a very real issue around the total student loan debt of over $3.4 billion. National's approach of significantly changing the repayment system to speed up debt reduction and tightening up the borrowing criteria is a far more sensible approach. Borrowing last year dropped $100 million on the previous year. Labour's policy is just going to get more young people in debt," Mr Smith said.

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