Lack of awareness of student loan burden
Friday, 5 November, 2004
Ogilvy: Disturbing lack of awareness of student loan burden
The key finding of an AC Nielsen study, commissioned by StudyLink and Inland Revenue, is that students have little awareness of the ramifications of student loans for their life beyond graduation, according to United Future education spokesman Bernie Ogilvy.
"The study reminds us that these students are 17 or 18 when they take out a loan, and do not foresee the drain that repaying the principal and the interest will have on their income once they finish studying".
"But by the time they graduate, the study reveals that borrowers become all too aware of the constraining impact of the loan on their new lives. Further training, home-buying and starting a family are all put out of reach, and fleeing overseas becomes an attractive option.
"I'm calling on the Government to undertake a more detailed study of the longer-term impact of student loans on life choices.
"It's also clear that prospective borrowers also need much clearer information on the implications of borrowing, and particularly to promote the understanding of something as elementary, yet significant, as interest.
"Boosting financial literacy and budgeting programmes in schools would ensure that tomorrow's adults are made aware of the perils of all debt, and not just student loans."
But above all else, the government needs to take note of the message in the survey from graduates that the pressure created by loan debt to head overseas is "overwhelming".
United Future's policy is to introduce a bonding scheme for graduates in fields facing skills shortages (e.g. health, teaching, social work), whereby a portion of loan debt would be written-off in return for work in New Zealand after graduation.
And when borrowers do look to start a family, United Future will freeze student loan interest and write-off a portion of primary caregivers' debt for two years after the birth of a child.