Tax Cut The Only Answer To Student Debt

ACT New Zealand Deputy Leader Heather Roy today called on Labour to free New Zealand from the millstone of student debt by cutting taxes and allowing people to repay their student loans more quickly.

"It is not surprising in any way that student debt is reportedly growing at a rate of around $1 billion a year and is forecast to reach $10 billion by 2010," Mrs Roy said.

"While students are required to pay around one third of the cost of their education - with the remainder being paid by the taxpayer - the fact is that student loans are widely viewed as 'free money'. Of course students are going to take it when they know they do not have to pay interest on the loan.

"Student loans have enabled many New Zealanders who could not previously afford to study an opportunity to do so. As such, increasing numbers of New Zealanders will find themselves in debt into their future - more than 700,000 people have borrowed through the student loan scheme since its inception in 1992 and the number is going to increase.

"The only way to resolve the student debt crisis is to cut taxes. The 39 percent tax rate should be abolished immediately and New Zealand should be working towards a much lower and flatter tax regime - only then will New Zealanders have the ability to pay off their loans quickly - and to save to ensure that their children do not end up burdened by such debt in the future," Mrs Roy said.