Greens propose student debt write-off

Nandor Tanczos

Students who stay in New Zealand after finishing their tertiary education would get their student debts written off under Green Party policy, Greens education spokesman Nandor Tanczos said today.

The policy would apply to people whether they were in paid, or unpaid work, he said.

The Green Party said it would pay for the policy by dipping into the Government's superannuation fund.

Mr Tanczos made the announcement at the Green Party's annual conference being held in Christchurch this weekend.

He said in a speech to almost 200 delegates, that student debt was around $7 billion and was growing at a rate of around $78,000 an hour.

The average amount owed to the student loans scheme per student had increased from $11,665 in 1999 to $14,424 in 2004 and $14,871 this year.

That did not include the almost $4000 borrowed from other sources.

Around 13 per cent of New Zealanders over the age of 15 owed money to the student loans scheme -- or almost 419,000 people, Mr Tanczos said.

Average repayment time of 6.6 to 8.9 years for men and 10.3 to 12.7 years for women did not tell the real story for the many individuals who faced a lifetime of debt, he said.

"We are calling for a debt write-off scheme so that every year a person stays in the country and works full time, in either paid or unpaid work, a year of their student debt would be wiped. That means there is an end to debt.

"People earning over the repayment threshold will still make repayments over the write-off period but at the end of year their debt will reduce by the amount borrowed to pay for a year of study, both fees and living costs," Mr Tanczos said.

Government figures indicated that a write-off after 20 years would have an economic -- as opposed to accounting -- cost in the region of $1.8 million a year with an initial cost of $12.3m.

"We believe that we can as a nation afford to be much more bold than that. We say, year for year, write off student debt."

"Make it pay to stay."

Annual repayments from student loans amounted to $509m. The real cost of writing off student debt year for year would be less than that because some repayment would continue to be made.

Current repayments would start as soon as a person earned more than $16,588 and there would be one income band.

The Greens would increase the threshold at which repayment began but seek to keep that fiscally neutral by introducing higher rates of repayment for people on higher incomes.

All interest would be suspended for people on low incomes and for primary caregivers, and under the policy zero real interest would be applied to student loans.

It would make study costs tax deductible for students who did not qualify for an allowance.

Mr Tanczos also said the Greens would bring in a universal student allowance, at the level of the unemployment benefit, for all full time students.

Currently just over one third of full time students were eligible for a student allowance and around half of the $7b total student debt was borrowed to pay for living costs.

Government figures estimated a universal allowance would cost in the region of $4.1b net over four years.

Mr Tanczos said the Greens recognised this might not be achievable overnight.

"We will seek to move towards it by progressively reducing the age at which students cease to be means tests on their parents' income."

This was the only area of government policy where people were considered financially dependent on their parents until they were aged 25.

To reduce the age limit to 20 was estimated by the Ministry of Education to cost around $250m to $312m a year.

The Greens would also seek to raise the parental income threshold. Currently when parents' income was less than $33,000, students could get $136.79 if they lived away from home or $109.43 if they lived with their parents.

This amount decreased by $4.80 a week for every $1000 increase in their income until the threshold of $63,825.84 was reached -- at which point students got no allowance.

The Greens would raise the accommodation allowance -- currently set at between $24 and $60 a week -- to up to $145 a week.

It would re-introduce an independent circumstances allowance based on work history -- which would cost around $5.4m to bring in -- and make all unemployed students eligible for the unemployment benefit over the summer holidays.

The Greens would also cap and progressively reduce students fees, Mr Tanczos said.

Reducing average fees to $1500 was estimated to cost around $300m or $200m to reduce average fees to $2000.

Green Party co-leader Rod Donald told the conference today that the Greens would reinvest some of the money set aside in the superannuation fund to progressively write off debt for young graduates.

The Greens oppose the so-called Cullen super fund.

Mr Donald said the Greens would use a portion of the planned contributions to the fund to pay for its student allowance policy.

Tertiary education was a public good, "it should be taxpayer funded," Mr Donald told the conference in a speech today.

- NZPA