Prebble to sell out his ethics for $4?
“Either Richard Prebble would sell out his ethics for $4, doesn’t value his time all that highly, or he has been inadequately briefed on student loans", University of Canterbury Students’ Association President Darel Hall said today.
In a speech to University of Canterbury students last Thursday Mr Prebble stated that if student loans were interest free as per the Labour Party policy, every student would borrow to the limit - if only to take the money to the bank to put into an interest earning account.
“Mr Prebble was highly complimentary of students. He said we could all work it out for ourselves and see what a great scheme he was proposing. Well, I decided to follow Mr Prebble’s advice, did a few rough calculations, and figured I would be $4 better off if I did exactly what he proposed.
The living portion of the loan pays $300 per fortnight. Rounding up the number of payments to 20 for simplicitys sake gives a student $6000 over 40 weeks of study, usually between March and November. If we assume, again for simplicitys sake, that the $6000 is received in one lump sum in the middle of that time period ie June 30, then it can be invested in a bank on July 1 - as per Mr Prebble’s suggestion.
The difference between the inflation charge on student loans as supported by a petition of 5000 students this year, and as per what I understand to be Labour Party policy, and bank interest rates is about 3%.
$6000 multiplied by 3% for 6 months gives me $90. Unfortunately there is a $50 charge for activating the student loan, and $6 ($.30 per transaction for 20 transactions) for automatic payment charges (I assume no one would draw attention to themselves by having the loan paid directly into a high interest bearing account rather than a current account).
I also have to pay resident withholding tax on the $90 at 33%, an additional cost of $30.
This leaves me $4.
Nice one. Think I’ll get that yacht then.
Even if some of the parameters change the net financial benefit to students willing to compromise their ethics will be very small.
I don’t believe for one minute that Mr Prebble is without ethics, but how about a reality check? Students are just like everyone else - mostly struggling to be good people in a strange old world. Yes there will be the greedies that try and use systems to maximise their own gain. But that pervades society be it business, politics, churches, students, whatever. If the damage is small shouldn’t we pity rather than envy such vacuous souls? This is especially true if we have a system where we believe that most people try to act mostly right, most of the time.”
For further expressions of exasperation about New Zealand politics contact Darel Hall UCSA President 03 3642 652 x3934