Westpac should give students, parents some credit
Hon Trevor Mallard
Minister of Education 29 July 2005 Media Statement
Westpac should give students and parents some credit
Education Minister Trevor Mallard today rejected Westpac's scenario on the uptake of student loans under Labour's interest free policy as extremist and scare mongering.
"Westpac's analysis is extremist – its maximum estimate assumes that every student will take up a loan if they have not already got one, and that they will borrow the maximum amount.
"It is highly unlikely that all students who have not got a loan will now borrow money, and even more unlikely that they will borrow to the maximum.
"While there may be a modest increase in borrowing, it pays to remember that when Labour made student loans interest free while studying in 2001 this decision did not lead to the massive increases in borrowing similar extremists predicted then. The amount of borrowers is almost the same now as it was then.
"The best forecasting we can do is to assume similar behaviour in this case. Students are not stupid – they know they are still borrowing money and will still have to pay it back.
"In fact repayment times will fall dramatically under our policy and students will save thousands of dollars in interest. New Zealanders are debt averse, and this policy is helping to get the student debt under control.
"At least half a million people will be directly affected by this change, including families of student loan borrowers who will be better off under Labour's policy.
"Labour is trying to provide a fair system of borrowing for students and we are confident that students are smarter than Westpac gives them credit for – as they have shown by not abusing the system since the interest wiped while studying in 2001.
"And there are stringent controls on how much people can borrow. It is simply not possible to draw down large sums of cash like you could under the National government in the nineties.
"Students can now only borrow their course fees which go directly to the institution and a maximum living cost of $150 per week paid in weekly instalments. Labour trusts New Zealanders to make sensible decisions," Trevor Mallard said.