Few graduates quit NZ to avoid their student debt

A Government report says there is no evidence that student loan debts of almost $6 billion are driving graduates overseas - even though 26 per cent of medical graduates leave the country after studying.

The Ministry of Education study tracked income levels and student loan debts of students who graduated in 1994 and 1997.

The "Living with a Student Loan" report showed 26 per cent of medical students who graduated with student loans in 1997 were overseas by 2000, and 11 per cent were overseas for the entire three years.

Overall, 8 per cent of people who graduated in 1997 went overseas, but those with higher qualifications and higher debts were more likely to go - nearly 20 per cent of those with debts over $25,000 in 1997 were overseas by 2000, compared to 3 per cent of those with debts under $5000.

Those overseas paid off their debts more slowly. Nearly half the 1997 graduates who went overseas had made no progress in reducing their debt by 2001, compared to 30 per cent of those who stayed in New Zealand.

The report said student loan debt was often blamed as a reason for brain drain, either to earn higher salaries or delay loan repayment.

It said there was no evidence of a mass exodus of graduates. It noted the long tradition of the OE and its benefits when people returned with extra skills and experience, and said most people returned within three years.

The report said that in June last year, more than 418,000 New Zealanders had loans - 13 per cent of the population over the age of 5.

The median debt was just under $10,000 and repayment time was about nine years.

However, the average loan amount had increased from $5525 in 1994 to $11,665 in 1999 and more than $14,424 in 2004.

By 2001, nearly half the 1997 group and 29 per cent of the 1994 group had made no progress in reducing their debt; 18 per cent of the 1997 group and 39 per cent of the 1994 batch had cleared it.

In Parliament, Education Minister Trevor Mallard said the report confirmed student loan balances were lower and were being repaid more quickly than people thought.

Later, Green Party spokesman Nandor Tanczos said Labour could not hide the "student loan crisis".

"While the highest earning graduates can repay their debt in a reasonable time, some people have made no progress in repaying their loan after 10 years," Mr Tanczos said.

The New Zealand University Students' Association co-president Camilla Belich said the country's most qualified people were being forced overseas by their tertiary debts.

"By burdening students with unbelievable levels of student debt, the Government is dislocating a generation and leaving New Zealand with chronic skill shortages in key areas."

Loans update

Total debt: $5.96 billion

Average loan: More than $14,424 (1999 average: $11,665)

Average repayment time: About nine years .