Dunne: $160m Govt grab is profiteering off student debt

The Government’s decision to hold the student loan interest rate at 7 percent is “almost criminal” when its annual interest take has quadrupled to $160.8 million in the past three years, United Future leader Peter Dunne said today.

“And it’s going to be $395 million by 2007/08 - so yes, we’re talking profiteering and the victims of it are young New Zealanders trying to build a future,” Mr Dunne said.

“The Government has a fine rort going - while young graduates can’t buy homes, delay having families and have to head overseas to get ahead.

“And those figures are after interest write-offs have been taken out - the mafia couldn’t do better,” he said.

Mr Dunne said the Government should cover its costs, and not turn the scheme into a cash cow - “particularly at such a high social cost to a whole generation of New Zealanders”.

“By topping up the ‘interest adjustment rate’ (the inflation rate) with a ‘base interest rate’ the Government sets the overall rate at 7 percent.

“But it has also admitted through parliamentary questions that if the 2005/06 interest rate was set to cover inflation and the scheme’s costs, it would only be around 3.7 percent - I think students would find that a far fairer arrangement,” he said.

United Future this week launched a comprehensive student support policy, of which a key plank was setting a fair student loan interest rate that meets the costs of running the scheme.

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