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Interest back on loans = harder to save
Interest back on loans = harder to save
Students are calling on the Government to immediately reject a baseless recommendation from the Savings Working Group that will make it harder to save. The Group’s report recommends, among other things, reintroducing interest on student loans after a student has graduated.
“Putting interest back on loans will make it harder to save for hundreds of thousands of New Zealanders with a student loan. It will increase debt, and it put back a serious burden on borrowers who are already struggling in these tough economic times,” says NZUSA co-President David Do.
“We understand the government wants to reduce its own debt, but in doing so it shouldn’t be putting on more debt onto the next generation,” says Do.
According to NZUSA’s 2010 Income and Expenditure Survey, 65% of students say that having a Student Loan will have a major impact on their ability to save for the future. Treasury have also noted [1] that putting interest back on student loans would discourage participation in tertiary education and reduce the incentive for graduates to remain in New Zealand.
“Interest-free student loans have reduced loan repayment times and enabled many to get debt-free faster. Supporting education and encouraging graduates to stay in New Zealand fosters improved growth and productivity. Undermining these opportunities would be a huge step backwards,” adds Do.
Students are also disappointed at the Group’s weak justifications for its recommendation. The Group cites “anecdotal evidence” suggesting the policy “creates a blasé attitude to debt, with former students unconcerned if they run up large credit card bills.”
“This is simply incorrect. Our Income & Expenditure Survey released last week shows that students have been more cautious regarding high interest credit facilities, with fewer accessing credit cards down from 25%(2007) to 18%(2010) and overdraft facilities down from 37%(2007)to 27%(2010),” says NZUSA co-President Max Hardy.
“The Savings Working Group should have researched the issues first, and we call on the Government to rule out this baseless recommendation. John Key must not break his election promise to students, graduates, families and communities,” concludes Hardy.
NZUSA is the national representative body for tertiary students and has been advocating on student issues since 1929.
[1] ‘Saving in New Zealand- Issues and Options’, released September 2010
ENDS
NZUSA - New Zealand Union of Students' Associations
We stand for opportunity, for all.
NZUSA is the New Zealand Union of Students' Associations, the national body that represents New Zealand's students' associations and the interests of New Zealand's 400,000 students at universities, polytechnics and in trades training.
We conduct original research, advocate to Government and through the media, and support New Zealand's students' associations to be more effective on behalf of their members. We advocate alongside Te Mana Akonga – The National Māori Students' Association, and Tertiary Women New Zealand – The NZUSA Women's Caucus.
Since 1929, we've believed in a society rich in opportunity, where anyone from anywhere can become any thing. We support accessible, affordable quality public tertiary education.
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