Students Caught In Debt Trap

New Zealand First education spokesperson Brian Donnelly is calling for the Government to urgently change the student loan scheme because it is sentencing young people to a lifetime of debt.

“The current $7 billion of student debt is indicative of a system that locks students into a debt trap, altering their life choices for years to come at a huge cost to the social and economic fabric of New Zealand.

“Much of this $7 billion will never be recovered. Already the Government has a current debt write off provision which means more than $1 billion of this debt has already gone down the gurgler.

“There are plenty of commonsense solutions to ebb the draconian nature of the current student loan scheme. The greatest contributor towards student debt is borrowing for living expenses. Immediate moves need to be made towards implementing a universal student living allowance. At the same time, incentives for over-borrowing would be reduced if students were required to pay an interest rate equivalent to the Consumer Price Index whilst they are studying.

“This would lead to a win-win situation by removing the need for students to borrow to pay for living expenses and current write-off provisions of interest would be unnecessary.

“This Government has given nothing but tokenism to the rising crisis of student debt in this country. Escalating debt must be eased now before it is too late,” said Mr Donnelly.

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