Rush is on for student loans

By REBECCA WALSH education reporter

Heavy demand for student loans is putting pressure on Work and Income New Zealand's revamped processing system.

Universities gearing up for the new academic year hope to avoid last year's debacle, when 40,000 students were affected by delays in processing loans.

Winz was strongly criticised in an independent report for ignoring advice on how to process the loans. Soon after, the Government spent $6 million on improving the system.

So far this year, Winz has processed 33,880 of the 34,704 allowance applications received, compared with 28,768 of the 33,392 received at the same time last year.

Of these, only 3132 have been finalised. Others have been pre-approved or are incomplete.

All 61,096 student loan applications received have been or are being processed, compared with 37,582 of the 40,220 received in 2000.

Only 7641 loan applications have been finalised.

Winz spokeswoman Kate Joblin said changes to the system, including 160 more staff at the Palmerston North call centre and a revamped internet site, had been in place since November.

Indications were that the processes for managing student loans and allowances "are meeting the department's expectations." She said Winz staff were on campus at 34 institutions to sort out any problems with loan applications.

New Zealand University Students Association co-president Andrew Campbell said Winz had worked hard to improve the loan system and the association was taking a "wait-and-see" approach.

But he was concerned at the growing level of student debt, which was estimated to exceed $4 billion this year and reach $15.5 billion by 2015.

The student loan scheme annual report, prepared by the Ministry of Education, Inland Revenue and Winz, described the scheme as a "significant Government asset."

At the end of June last year, 274,891 students had debts with Inland Revenue.

The average amount borrowed last year was $4917.

Mr Campbell said the main immediate concern was students' personal loans, but there were wider implications as students would ultimately have to pass the debt on to others in the community - for example, through increased doctors' and dentists' charges.

Christchurch College of Education Students Association president Christin Watson said the burden of student debt was contributing to continued low enrolments of secondary teacher trainees and the numbers heading overseas to teach.