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Suggestion to Drop Loan Repayment Threshold Beyond the Pale

nzusa-new-zealand-union-of-students-associations

Wed May 02 2012 12:00:00 GMT+1200 (New Zealand Standard Time)

Suggestion to Drop Loan Repayment Threshold Beyond the Pale

NZUSA - New Zealand Union of Students' Associations Wednesday, 2 May 2012, 1:34 pm
Press Release: NZUSA

Suggestion the Loan Repayment Threshold Should Drop “Goes Beyond the Pale” – NZUSA.

The New Zealand Union of Students’ Associations (NZUSA) is alarmed at the suggestion that the threshold for loan repayments might decrease, as suggested yesterday by Tertiary Education Minister Stephen Joyce.

The loan repayment threshold is just $19,084. NZUSA has been calling for it to increase to the average wage, as in Australia, or 150% of the poverty level, as is proposed in a United States bill currently before the US House of Representatives.

“Increasing the repayment rates at all amounts to an effective tax increase for graduates. Some might be able to afford this, in which case they could make voluntary repayments to reduce their loans, but for many they simply have no spare money and to have extra deducted from their wage packets will be an impossible burden. The proposal goes beyond the pale,” said Pete Hodkinson, President of the New Zealand Union of Students’ Associations.

“This is especially true for those near the current threshold, and to impose extra obligations on people earning only $19,084 per year, or even less, is simply cruel.”

“According to research by Susan St John from the Child Poverty Action Group, the impact of the failure to index the loan repayment thresholds is already having a dramatic effect on the Effective Marginal Tax Rates of the lowest paid and most vulnerable New Zealanders.”

“A parent on the Domestic Purposes Benefit, with a student loan, now has to pay back that loan from the $100 a week she earns from a part-time job. Her effective marginal tax rate (EMTR) is 59.5%. If she earns $200 per week then her DPB starts to get cut, and including the loan repayment she has an EMTR of 99.5%. Who would work under those conditions, and how’s she meant to make the transition off a benefit as intended by the government’s welfare reforms?” said Hodkinson.

“There may be some graduates who could repay their loans faster, and perhaps the government should focus on them, but for those who can’t pay can’t be forced to pay, it will simply cause other social problems.”

NZUSA is the national representative body for tertiary students and has been advocating on student issues since 1929.

ENDS

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NZUSA - New Zealand Union of Students' Associations

NZUSA - New Zealand Union of Students' Associations

We stand for opportunity, for all.

NZUSA is the New Zealand Union of Students' Associations, the national body that represents New Zealand's students' associations and the interests of New Zealand's 400,000 students at universities, polytechnics and in trades training.

We conduct original research, advocate to Government and through the media, and support New Zealand's students' associations to be more effective on behalf of their members. We advocate alongside Te Mana Akonga – The National Māori Students' Association, and Tertiary Women New Zealand – The NZUSA Women's Caucus.

Since 1929, we've believed in a society rich in opportunity, where anyone from anywhere can become any thing. We support accessible, affordable quality public tertiary education.

Contact NZUSA - New Zealand Union of Students' Associations