By BRONWYN SELL
Young people with large student loans are finding it hard to buy a roof over their heads because they cannot afford the mortgage.
An Otago University Students' Association survey of 36 bank managers has found that nearly half have turned people away because their debt repayments, including student
loan payments, were too high.
Labour and Alliance education spokesmen have pounced on the issue as evidence that student loans are crippling a generation.
However, Tertiary Education Minister Max Bradford said student loans were not a major factor for people seeking mortgages.
Two graduates who were turned down for mortgages because of student loans said they would not have borrowed if they had realised the implications.
A 28-year-old office coordinator and mother with a $15,000 student loan said she and her partner, who owed $16,000, were turned down for a $142,000 mortgage two years ago despite having a $50,000 deposit and a combined income of $45,000.
"I was 21 years old when I took out the [student] loan and it was quite easy to believe what was being said."
A 28-year-old man earning $28,000 in a sandwich bar said he was turned down for a $42,000 mortgage last year because he had a $33,000 student loan and his partner, who is still studying, owed $10,000.
"I didn't realise student loans would have so much control over finances after varsity."
The Banking Ombudsman, Liz Brown, said banks had to be satisfied with an applicant's security and ability to service a debt, but she urged people to contact her if they were turned down despite having good security and income.
"What we are seeing is the beginnings of a very major effect that student debt is going to have on the course of people's lives."
