Tuesday, 22 February 2005

Dunne: Giving students back their future

Changes must be made to the student loan scheme to stop it crippling graduates for life, United Future leader Peter Dunne said today in announcing his party's student support policy.

"Repaying student loans effectively adds another 10% tax on the income of graduates, and has a huge impact on their decisions about study, and whether they stay in New Zealand, buy a home, or start a family.

"These are the things that every previous generation of New Zealanders has been able to take for granted, but they are also the foundations a nation is built on and the Government is simply turning them into a mire of problems for our young people," he said.

"Our policies to make the student allowance system fairer should help to keep debt down, but we need to take other measures to stop a milestone from becoming a millstone."

United Future will recognise the impact of student loan debt on raising a family by freezing interest and writing off a portion of the debt of the caregiver for two years after the birth of a child.

United Future will also keep more graduates in New Zealand and minimise their loan debt by establishing scholarships and loan write-off schemes for those who are qualified in fields facing shortages (e.g. doctors, nurses, teachers, social workers), in return for a continuous period of work in New Zealand.

In addition, United Future will: * ensure that the student loan interest rate is set at a level which is fair and meets the costs of running the scheme, and retain the present policy of no interest while studying * allow students to reduce their debt if they work for more than 100 hours as a volunteer for a registered charity (up to a maximum of $500 per annum). * restrict students from taking out further student loans for their fees if they have continually failed to pass their courses * commission research into the long-term impact of student loan debt on the life choices of graduates

"We must also look to move from a system that requires students to repay the costs of their study afterwards to a system that encourages families to save for tertiary education beforehand. Clearly it makes more sense to earn interest on savings rather than to pay it on debt," education spokesman Bernie Ogilvy said.

"For that reason, we will also introduce a voluntary long-term savings programme that would allow parents to save for their children's future tertiary education from birth, drawing on contributions from relatives, the children themselves, and appropriate incentives from the government."

Such a scheme could also be used by young people to save for a house or to start a business, as is the case in Britain.

ENDS

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