Extra student loan fee is interest by stealth

Tertiary Education Minister Steven Joyce plans to get around the popular interest-free student loan policy by charging an extra fee to over 500,000 New Zealanders, the Green Party said today.

“The Minister knows he can’t mess with the popular interest-free loans policy, so he’s trying to get around it by charging interest by stealth,” Green Party Associate Tertiary Education Spokesperson Gareth Hughes said.

The Minister has floated the idea of an annual $50 charge to all former students with an outstanding loan balance. This would affect around 500,000 New Zealanders and net the Government about $15 million dollars per year.

“Everyone in this category is paying their loan off at the required rate, because once they earn over the repayment threshold, it comes straight out of their pay. Others pay their loans off even faster than required,” Mr Hughes said.

“It seems unnecessarily punitive to hit all these people with an extra annual fee that they can’t avoid.”

Mr Hughes said the Minister’s cold-blooded approach to the student debt issue failed to recognise that student loans are an investment in education and the future of our economy.

“The size of the country’s student debt is a big concern, but trying to circumvent the interest-free policy by the backdoor isn’t the way to address it,” Mr Hughes said.

“Student loans provide access to tertiary education for many who can’t otherwise afford it, but rising fees and living costs mean people have to borrow more and more.

“It’s these things that need addressing to combat the student debt crisis, not hitting people with an extra fee when they are already paying their loans back.

“Unfortunately this Minister’s other decisions – like signalling fee increases for courses such as medicine and linking tertiary funding to pass rates – are all taking us in the wrong direction,” Mr Hughes said.