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Rahui Katene: Student Loan Scheme Bill; 2nd reading

Rahui Katene, MP for Te Tai Tonga
Wednesday 17 August 2011

Student Loan Scheme Bill; 2nd reading

It is now approximately 25 years since I was a fulltime student, starting off on my Bachelor of Arts degree at Waikato University, and then switching after a year to turn my focus to law.

Who would have thought in 1986 that I would be now turning that study to practical effect, implementing the law in these hallowed halls?

In those days, our concerns were around scaling Maori down.

For those who were not around at the time, this was the practice of scaling marks down for students learning te reo Maori.

There is an article by Jill Bevan-Brown, which tells the story of a young man’s marks in Bursary Maori being scaled down from 94% to 67%. The mother intervened only to be told the Government could not afford the costs of large numbers of A Bursaries earned in the Maori Bursary exam. And yet the same degree of scaling was not applied to other languages such as Russian and French.

I tell this story because it is but one issue amongst a history of various blocks and barriers that Maori students have experienced in the transition from secondary to tertiary education.

Such a history provides a vital backdrop to the Maori Party’s position on tertiary education, and in the specific case of this
Bill, around the student loan scheme.

The Maori Party believes that tertiary education is a front-end investment into the nation’s future and should be freely available to all. It is from that basis that we seek to increase accessibility to tertiary education, to ensure that all people have the chance to pursue tertiary education.

So how does the student loan scheme in this framework? The Maori Party has tried very hard to ensure that sufficient attention is paid to Student loan debt repayments. It has been our position that student loan debt repayments should only start when a student starts earning one and a half times the average wage.

We have also recommended that there will be a five year grace period for repayments after graduation.

That is our core position and so we have been on the alert to see how this Bill, which repeals the Student Loan Scheme Act 1992, the current Student Loan Scheme legislation, can be seen in that light.

Significant points of the Bill currently before the House is that it will:

• Increase the loan establishment fee from $50 to $60;
• And establish an annual $40 Inland Revenue administration fee.

These would not seem to be aspects that we can support.

And further when we read the submissions we see that the New Zealand University Students Association supports the current annual assessment of earnings to determine student loan repayment obligations – rather than the proposed shift to pay-period repayments in the Bill

NZUSA is concerned at the proposed move away from a simple annual repayment threshold to a weekly/fortnightly/monthly pay-period system, and is opposed to any increased obligations borrowers may therefore face under this Bill.

Their argument was one of consistency.

A shift to a pay-period system is inconsistent with other tax obligations – PAYE payments are determined on an annual basis with a year-end square-up of income, as is child support and Working for Families. Student loan borrowers should not be treated differently, particularly if the IRD is supposedly aiming to improve systems and remove complexity for all parties.

So on this ground, it is the view of the Maori Party that the increase in the loan establishment fee and the introduction of an annual Inland Revenue administration fee will have a negative impact on students who have student loans.

Numerous annual reports from Te Tahuhu o te Matauranga tell that Maori Certificate level students carry a larger student loan debt five years after study, reflecting notably lower earnings.

Māori with bachelors' degrees or postgraduate qualifications also had notably higher average leaving loan balances than non-Māori.

And yet there are some issues that have come up during our discussion on the bill which warrant further investigation.

The implementation of the policy and administrative reforms through a new loan management system has proven more complicated than Inland Revenue expected.

And so this Bill is a genuine attempt to make implementation easier.

The Bill extends the exemption for full-time full-year students from having repayment deductions made from their salaries or wages to also include:

• students who undertake the equivalent of a full-time study workload for part of a year and
• to students who started to draw down on student loans before their study commenced, or
• students who worked over short “non-study” periods or the Christmas period and intended to study after the period.

That is a step forward, in terms of being prepared to factor in some flexibility into the system – which if we are serious about supporting students from accessing tertiary education is positive.

This Bill also rewrites the legislation governing the administration of student loans, reforming the way student loans are repaid, the way borrowers manage their loans, and the way loans are to be administered.

The changes would allow borrowers to manage their loans electronically, and Inland Revenue to provide more services to borrowers.

The student's own association, the New Zealand University Students Association, has spoken very positively about this aspect of the Bill.

They see the expansion of online services and increased electronic and personal management of outstanding student loan balances will be of great benefit to borrowers generally, and particularly useful for overseas based borrowers.

The introduction of a new electronic loan management system, will enable students to monitor and manage their loans online –and from accounts that has been received positively by students themselves.

Mr Speaker, one of the dilemmas parties come to – well parties that have the option of voting on principle rather than just the party line –is that we oppose some parts of the bill (the increased costs for students) – but we support other parts – (the incentive to be more effective and particularly to move into the information age).

And so in reaching our vote, our discussions reflected this dilemma.


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