National eyes student loans

Bill English

National is promising an overhaul of the student loan system in a move that could help finance its mystery tax cuts.

Education spokesman Bill English is set to announce the party's tertiary education policy this week.

He is expected to emphasise the importance of a controlled scheme in narrowing the income gap between New Zealand and Australia.

The party is expected to argue that by cutting levels of debt, students will be better off financially once they graduate.

That could be done by restructuring the size or shape of a loan taken out upon enrolment at a university, training institute or wananga.

Incentives would be offered to help students repay loans afterwards.

Mr English declined to comment on the issue yesterday.

But Education Minister Trevor Mallard said last night that tightening of the system would affect people on low incomes first. They would lose any opportunity to enter professions like medicine and law.

This week's National Party announcement coincides with tomorrow's Government report-back on the tertiary education sector structure: the Qualifications Authority, Tertiary Education Commission and Education Ministry.

National and Act have been attacking the Government over its funding of fees, allowances and loans for courses of dubious value at wananga and other tertiary institutes.

A Government source conceded that money could be saved by cutting back on student loans, perhaps allowing more room for tax cuts.

The Government was already piloting a Study Link scheme in which the risks in taking out a loan were explained to students in the same way that a bank manager would explain them, and that had resulted in reduced borrowing.

- HERALD ON SUNDAY