Kathy Webb
A Hawke's Bay graduate earning the average wage and making minimum payments on a $40,000 student loan will retire at 65 owing nearly a quarter of a million dollars.
As the New Zealand University Students' Association releases new information showing student debt and fees have gone up by more than
a third since 2001, low wages are making it more difficult for them to stay in New Zealand and repay their loans.
The average annual income of New Zealanders is $28,808. That figure is arrived at by combining the average male income of $36,400 and the average female income of $21,684. A 30-year-old earning $28,808 a year will be liable for minimum loan payments of $24.30 a week, or $1263.60 a year. But at that rate, their loan will balloon to $249,069 during the next 35 years.
Increasing the payments by $20 a week above the minimum, to $44.30 a week, would still leave the student owing $98,437 when they retired at 65.
A woman with a $40,000 loan, earning the average female wage and making minimum repayments of $10.60 a week would retire owing $352,253.
Increasing her payments $20 a week to $30.60 during her working life would still leave her with a debt of $201,621 at retirement.
Loans of $35,000-$40,000 are common among Hawke's Bay graduates because they must leave home to attend university, and usually have to borrow the maximum in living costs and fees.
Even those staying in Hawke's Bay to study are borrowing approximately $13 million a year in fees, living costs and course-related costs.
Despite Education Minister Trevor Mallard's assertion today that students owing $40,000 or more were in a small minority, and they tended to be well qualified and earning high incomes, many graduates with loans are working for wages well below the average.
The 2001 Census revealed that most people in Hawke's Bay earn less than $30,000 a year. The median income was $16,700 a year.
Since 1996, 60 percent of New Zealand students graduating with loans have gone overseas and stayed there.
