Students need assurance on interest-free loans
new-zealand-labour-party
Fri May 01 2009 12:00:00 GMT+1200 (New Zealand Standard Time)
Students need assurance on interest-free loans
Friday, 1 May 2009, 5:36 pm
Press Release: New Zealand Labour Party
Students need assurance on interest-free loans
The Government must give students an assurance that its plan to give bonuses to those making extra repayments on their loans is not a precursor to removing interest-free loans, says Labour Tertiary Education spokesperson Maryan Street.
The Government yesterday introduced the Student Loan Scheme (Repayment Bonus) Amendment Bill, which offers discounts to students who voluntarily repay their loans faster.
“On the surface the plan seems like a reasonable incentive to encourage repayments – although it would obviously only benefit those on higher incomes who have the extra money,” Maryan Street says.
“But a more careful analysis suggests that either the Government has a secret agenda to re-introduce interest on student loans and is only telling half the story – or that it failed to properly evaluate whether the scheme would actually work.
“It doesn’t take a rocket scientist to work out that if you have a student loan to repay and have some spare cash, you are much more likely to leave the student loan as it is and invest elsewhere where you will get interest.
“There would therefore seem to be little point in introducing a voluntary repayment scheme unless you also planned to reintroduce interest on the loans.
“Revenue Minister Peter Dunne himself alluded to the Government’s concerns about the interest-free nature of the scheme when he introduced the Bill in Parliament last night,” Maryan Street says.
“And earlier this week Finance Minister Bill English’s former chief press secretary Richard Long suggested in a column that Mr English should remove the interest-free loans in the upcoming Budget.
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“Students will be worried and the Government needs to explain whether it is now planning a u-turn on its commitment not to remove interest-free student loans either in the upcoming Budget or during this parliamentary term.
“It otherwise needs to explain exactly why students would sign up to voluntary repayments and how many it expects to take advantage of the scheme which, on its own, appears destined to achieve nothing.
“If the Government is not going to re-introduce interest on student loans, what else has it got planned?”
ENDS
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