Large loans being taken out by rising number of students

Student debt, which has ballooned to $6 billion, is wreaking havoc on the whole economy and the Government must "act urgently" to address it, students say.

The latest student loan scheme report released by Inland Revenue shows the proportion of student loan borrowers with large debts is increasing, with over 500 extra borrowers having loans of more than $40,000 since the last quarterly report.

The person with the biggest student loan in the country now owes $179,732.

New Zealand University Students Association (NZUSA) Fleur Fitzsimons said student debt had more than doubled under the Labour-led Government and the "big scary loans of many thousands are not going away".

More than 379,000 people now have student loans under the scheme, which is now in its 12th year.

"Student debt is wreaking havoc on our economy and our society," Ms Fitzsimons told NZPA today.

"Graduates are putting off having children, putting off buying homes, and many are leaving the country because of their student debt.

"The Government needs to act urgently in response to the student debt crisis -- it shouldn't need any other evidence that it needs to act now."

It was time for the Government to "deliver on its promise" to increase access to living allowances, she said.

"As living costs make up a bigger proportion of bigger student loans, it's clear that borrowing for rent and food is forcing students into multi-thousand dollar debts."

The quarterly report showed that recent changes to the loans scheme have not fixed the huge student loan problem, she said.

While the freeze on fee increases had helped, Labour had "completely turned its back on students" by allowing universities to lift fees last year, she said.

"This report refers to a time when fees were frozen, so we can expect student debt to get much worse when the effect of the fee rises kicks in....

"With big fee rises in many areas, expect to watch the big debts balloon and the problems associated with debt get even worse."

- NZPA