2 May 2006

Student loans one of many factors driving student OE decisions – new study

People with higher levels of student debt are more likely to go overseas post-study. But student loans and their size are not the only factors associated with the decision to live overseas, according to a report released today by the Minister for Tertiary Education Dr Michael Cullen.

“The report found that factors such as level and field of study, age, ethnic group, and citizenship status, also influenced the likelihood of people living overseas,” Dr Cullen said.

“In addition, what this new study suggests is that factors not included in this analysis, such as individual preferences, personal circumstances and employment opportunities, are possibly more important factors in the decision of New Zealanders to live overseas,” he said.

The Ministry of Education report “Do student loans drive people overseas – what is the evidence?” followed 23,000 students who finished studying in 1997 with a student loan and looked at who was likely to be overseas in 2002.

The report was based on information from the Ministry of Education, Statistics New Zealand and Inland Revenue. Inland Revenue recently advised that the total number of loan borrowers known to be overseas on 31 March 2006 was 26,864.

The report considered the effects of factors such as loan levels, demographics, and study undertaken on the likelihood of borrowers being overseas five years after finishing tertiary study.

The report supports earlier studies showing that borrowers with higher student debt were more likely to be overseas, once differences in demographics and study choices were taken into account.

“But the report suggests that the amount of student debt was not likely to be the sole reason for a borrower being overseas,” Dr Cullen said.

The new interest-free student loan policy provides an important incentive for young New Zealanders to stay and contribute to our economy or to return from overseas. The government has introduced an amnesty for borrowers in default – again targeted at encouraging borrowers overseas to return home. And since 2004, the Government has introduced a range of scholarships requiring the recipient to stay in the country when they finish study.

“While loans are not the only factor in people going overseas, they are clearly having an effect. This report confirms that we were right to make changes to the loan scheme as one way of encouraging New Zealanders to stay and contribute to our society,” said Dr Cullen.

“There isn’t anything wrong with young people spending time overseas after they finish their studies. It’s only a problem if they don’t return,” said Dr Cullen. “In fact, research suggests that New Zealanders who live overseas pick up new skills and insights they are able to contribute to the New Zealand economy when they return.”

The report may be downloaded from:
http://educationcounts.edcentre.govt.nz/publications/tertiary/indexDate.html

ENDS

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