Interest free student loans here to stay

Student leaders are calling for common sense and a collective approach to funding the tertiary sector, in light of backward and out-of-date suggestions from some quarters.

“The removal of interest on student loans in 2006 was the most significant and positive amendment to the student loan scheme since its inception, and was welcomed resoundingly by students and graduates as well as the public”, said Sophia Blair, Co-President of the New Zealand Union of Students’ Associations (NZUSA). “This policy has made tertiary education more affordable, particularly for under-represented groups, and has reduced loan repayment times significantly, all of which are enormously beneficial to both students and the country”, added Blair.

 “The National-led Government reaffirmed their solid commitment to retaining interest-free student loans at the beginning of this year, so the debate has now moved on”, said Blair.

“Times are tough and universities and polytechnics are under-funded, but revoking interest-free loans is not the answer to the problem”, said Blair. “What we need is for Government to step up and fund the sector appropriately and for more creative and innovative discussion on addressing the needs of the sector, rather than short term thinking of this kind”, said Blair.  

“Student Debt is already 10 billion dollars and growing and will hit 20 billion by 2022. Adding interest onto student loans will further increase this burden on students and create long term consequences for New Zealand”, said Blair.

“Contrary to what some are saying, we know that when interest was being charged on student loans throughout the 1990s that tertiary institutions opted to significantly increase tuition fees year after year. Suggestions that reinstating interest on loans now will somehow encourage universities to keep fees down are extremely implausible, said Blair.

 “Students are particularly vulnerable during a recession, being hit harshly by rising unemployment and struggling to make ends meet on very limited incomes,” said Blair. ”Hitting the most vulnerable group in the sector with higher costs is highly unfair in these tough economic times and completely inequitable”, concluded Blair.

NZUSA is calling on the Government to reaffirm its commitment to interest free student loans.

ENDS

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