Payback pledge for graduates

By AUDREY YOUNG

National is promising to write off a portion of student debt for graduates who remain in New Zealand in the first five years after graduating. in a major policy shift announced yesterday.

Dubbed the "You Stay, We Pay" scheme, the party says it will write off 10 per cent of the outstanding loan principal every year for five years for those who stay and work in New Zealand.

Graduates who go overseas for part of the first five years will be eligible for the write-off for the years spent in New Zealand, National leader Bill English told delegates at his party's annual conference yesterday in Wellington.

The scheme would apply to graduates of universities, polytechnics, colleges of education, and waananga, Maori tertiary institutions.

It would begin with this year's students.

Latest figures show about 35,000 or 57 per cent of 60,000 students graduate with debt.

National estimates that the scheme would cost a total of $120 million in the first three years, and $175 million a year by its eighth year.

Under the present repayment regime, a student with a $15,000 debt earning $35,000 a year would see the loan gone in seven years.

National leader Bill English said student debt was preventing people from buying cars, and homes and having families.

"I say to every one of them - your country has more to offer you than a lifetime of debt. And you have more to offer your country than the need to earn an Aussie dollar to clear your debt."

Other aspects of National's tertiary education policy released today include pledges to:

* fund tertiary education institutions based on the quality of education they provide, not whether they are publicly or privately owned;

* encourage competition among universities and polytechnics, while reducing central control;

* review the funding system to try to ensure the money paid to institutions reflects the costs of courses being provided; and

* separate funding for research undertaken by institutions from that paid for tuition.

Mr English said the country needed a "dynamic tertiary sector that produces quick-thinking graduates with sound vocational skills".

"The key to this is an education system that focuses on quality, flexibility and choice, not on whether a tertiary provider is publicly or privately owned, or what politicians like."

Meanwhile Tertiary Education Minister Steve Maharey says average student debt has fallen for the first time in the life of the student loans scheme since it was introduced in 1992.

It has fallen from $12,883 to $12,831.

From April 2000, the Government had written off the interest on loans of those in fulltime study and students with low incomes in part-time study. The value of the write-off had been $134 million, or an average of $900 per borrower.

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