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Home / New Zealand

Protest as student debt hits $7 billion

Stuart Dye
By Stuart Dye
Head of Print Content·
27 Apr, 2004 07:33 PM3 mins to read

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By STUART DYE, education reporter

Student debt will reach $7 billion today, 12 years after the loan scheme was introduced.

The debt grew by $47,000 each hour, said the University Students' Association.

It is calling on the Government to introduce a universal living allowance instead.

It said two-thirds of the country's students had no
choice but to borrow to pay for food and rent.

Many faced hardship and even poverty while they studied, setting themselves up for a lifetime of debt.

Meanwhile, those who had graduated were still struggling to pay off debts a decade after starting work.

"It is a horrific amount threatening our economy and society," said Fleur Fitzsimons, association co-president.

"We have workforce shortages in health and education, while graduates are leaving New Zealand because of their student loans."

The Government released the $7 billion figure under the Official Information Act.

According to the students' association, debt is rising by almost $1 billion a year.

Inland Revenue figures show the person with the biggest student loan in the country owes more than $179,000.

And the Government's Student Loan Scheme Annual Report, released last October, showed student loans would total $14.4 billion by 2020.

Ms Fitzsimons put the blame firmly at the feet of the Government. Before 1990, tertiary fees were low enough, and access to allowances was wide enough, for students to fund extra costs through part-time and holiday work, she said.

But with the introduction of tuition fees in 1990 and changes to parental means testing, the Government introduced the student loan scheme to allow students to cover the rising cost of tertiary education.

"The scheme has been a dismal failure - people are driven overseas, can't afford to buy a house and put off having children due to the level of debt," said Ms Fitzsimons.

The students' association is calling on the Government to introduce a living allowance, similar to unemployment benefit, in the Budget.

"Students are the only section of society who must borrow to live. This is simply not fair," said Ms Fitzsimons.

Students around the country are meeting today in a show of unity and anger at what they are calling a "financial crisis". In Canterbury, they will gather round a "debt clock" at midday - the time the loan balance is expected to exceed $7 billion.

And Massey students would hold a debt fair to highlight a level of debt that "could buy one-third of all properties on the North Shore", said Nicholas Mayne, president of the Albany branch of the students' association.

Prime Minister Helen Clark has already promised to widen eligibility for allowances in this year's Budget.

But universal allowances are unlikely.

A spokesman for Associate Education Minister Steve Maharey said New Zealand's student loan debt compared favourably with that in other countries.

More than $1.9 billion had been repaid and the loan scheme was still relatively young.

The scheme was successful in allowing more young people into tertiary education, he said.

Runaway loans

* More than 379,000 people have student loan debts.

* The average amount borrowed in an academic year has risen from $3628 in 1992 to $6204 in 2002.

* The average debt has increased from $5525 to $12,643.

* The average repayment time is 9 1/2 years.

Dread at weight of loan repayments

Herald Feature: Education

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