25 November 2005

Key talking nonsense again

“John Key’s scaremongering over the interest free student loan policy ignores a number of important facts,” Finance Minister Michael Cullen said today.

“It is true that the government will be moving to prevent people trying to game the scheme but the benefits of gaming it are much smaller than National claims and the opportunities much fewer.

“The young man, for example, who got a $15,000 voluntary repayment refunded and invested the money in an interest bearing account may find that the arithmetic behind the transaction is not that attractive because, by my calculations, he will have to get nearly 11.5 per cent on a 39 cent personal tax rate to avoid actually losing on the deal.

“And although official costings assume that the volume of repayments above the statutory minimum will diminish with the abolition of interest charges, the repayment of the principal will still be compulsorily deducted and loans will continue to be available only to cover fees, course-related costs and, in the case of full-time students, living costs to a maximum of $150 a week,” Dr Cullen said.

ENDS

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