Otago University students have highlighted a problem which the Government should have started investigating years ago, Labour associate education spokesperson (tertiary) Steve Maharey said.

Steve Maharey said the survey of bank managers and loans officers which showed that more than half of them had refused a mortgage or loan with student loans being a factor, raised major concerns for a generation of young New Zealanders.

"The Government has avoided doing this kind of research for fear of what it would discover," Steve Maharey said.

"What Otago students have revealed is that the burden of student loans is impacting on students being able to get on with their lives. It is a problem that is going to grow along with the debt levels of thousands of young New Zealanders unless there is a change in government and a change in the student loan scheme.

"Under Labour, full-time and other low income students will pay no interest on their student loan while they are still studying. After that, borrowers will not pay any base interest on their loan balance until they are earning at least $25,000. Base interest will be gradually phased in for those who earn between $25,000 and $30,000.

"This is the start to our commitment to lowering the costs of tertiary education.

"We are also planning a thorough review of the loans system including investigating the economic and social impact of high student debt levels and whether fear of such debt is having perverse effects on participation in further education and training and on decisions about staying in New Zealand after graduation.

"The Otago survey shows that there is a definite need for such a review," Steve Maharey said.

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