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Government And Opposition Miss The Point On Loans

25 February 2000


Both Labour and National make valid points about the student loan scheme but both also miss the point says United New Zealand leader, Hon Peter Dunne.

The National Opposition are claiming that Labour's election policy of not charging interest on student loans will encourage students to borrow more, while the Labour Government welcomes the increase in loans being taken up as a sign of increased participation in tertiary education.

Mr Dunne says both National and Labour are making worthwhile claims. "While more students may go into debt their cost of servicing that debt will be much lower.

"More importantly interest free loans while studying should encourage more students to take up the option of tertiary study and perhaps encourage them to stay in New Zealand after their studies, because of lower repayment levels. This is surely a desirable outcome for the students and the country in trying to build our knowledge economy," says Mr Dunne

He says what is actually needed is adoption of United New Zealand's three point funding approach to tertiary education. Both National and Labour while making some important debating points, miss the essential issue which is the need for an integrated approach to tertary funding.

The policy calls for:

limiting student interest on loan repayments to movements in the CPI (Consumers Price Index)
increasing core funding for tertiary institutions to 80 per cent of course costs
abolishing parental income testing of student allowances for students over 20 years.

"By implementing United's integrated approach course costs will be lower and student allowances will be more freely available, thereby reducing the demand for student loans and student debt levels. Furthermore if student loans are made available for legitimate costs with low interest repayments then individual students will have less debt and more people will be encouraged to embark upon and extend their tertiary study.

"The Government's move in reducing fees for dentistry students deserves to be welcomed. Their planned review of tertiary funding needs to implement a formula to reduce course costs so institutions can set lower fees and thereby reduce the need for high levels of student debt.

"United's three pronged plan aims to achieve this," concludes Mr Dunne.


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