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Happy Birthday (or not) Student Loan Scheme

The tenth anniversary of the student loan scheme more closely resembles a decade of an intractable degenerative illness than a slice of social progress, according to Liz Gordon, Alliance Education spokesperson.

"The scheme has altered the lives of hundreds of thousands of New Zealanders, most of them in their twenties or early thirties," she said.

"The scheme has contributed to the increase in the average age of child-bearing to 29 years. Many highly educated women are now waiting longer and longer to have babies, often so their loans can paid off first.

"The student loan scheme has directly reduced the take-up of home ownership. Many former students have debts the size of mortgages and aim to pay their student loan back before buying a house. Many have found their disposable income, after loan repayments, is too low to support a mortgage.

Dr Gordon said that escalating administration costs, high default among young people overseas and questions from the Audit Office have dogged the scheme.

"Attempts by Inland Revenue to set up international data matching to identify defaulters in Australia and Britain have failed. Those countries do not have our problems because their schemes are much fairer, and they are unlikely to assist us when they have their own taxpayers to worry about."

Liz Gordon said that the loan scheme could not be abolished until action was taken on allowances and fees.

"If universal allowances were reinstated future student debt would fall by two-thirds, as guaranteed living costs would also mean students would try and pay off their fees instead of borrowing. We must bite the bullet and reinstate these allowances as a first step."

"Failure to act now will mean that, at the scheme's 20th Birthday party, there will be 20 billion candles on the cake."


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