We asked Labour's Jacinda Ardern and National's Nikki Kaye: Is the current student loan system working?
JACINDA ARDERN
It's not often that a Minister finds themselves escaping an angry crowd through a window, literally. But that's exactly what happened one fine day in 1994. The then National Party
Minister of Education was visiting Canterbury University when things got a touch ugly. A few years before, said Minister had done an about face on tertiary policy causing fees to jump dramatically. University education was fast becoming inaccessible and three things happened as a result: a student loan scheme was introduced, students got increasingly restless, and Education Ministers started climbing out of windows.
Many readers will know the torrid history of student loans. Introduced in 1992, the take up rate was high but costly, with interest charged on loans while students were still studying. That's probably why I remember two big decisions when I finished up at high school; what should I study (my father announced one day that if I chose law I would be written out of the will, which always seemed an ironic proposition to me, given a degree in law would have made me better equipped to write myself back in) and how could I avoid a giant student loan?
By the time we hit 2000, things started to move a little. Labour won the election and removed interest on loans while studying. In 2005, interest from loans was removed entirely for those living in New Zealand. The National Party called it an election bribe - I just called it the right thing to do.
The interest free student loan scheme is far from perfect, but in my mind it is now part of a social contract, especially in lieu of an allowance scheme that has broader reach. Sporadic talk of adding interest back to loans shows that this is not a view shared by all sides.
I do want to add a couple of caveats though. Firstly, of course students have an obligation to pay back their loans, and by and large they are. The average repayment time is now 6 years, down from 10 years in 2002. Kiwis living abroad should be no exception.
But we also have a responsibility to students. If demand for tertiary education is high, the government response shouldn't be to retrospectively limit young people's access to loans but that's what many of the recent changes to the system will mean. A student who learnt the hard way that university was not for them and moved successfully onto a polytech, will now find that if they fail just one more paper, they will lose their eligibility for a student loan. Some institutions are reporting that between 20-30 per cent of their students are at risk of falling foul of student loan requirements for 2011. It's a recession; our focus should be on making sure young people are in education or training, not on finding ways to boot them out.
And this is where we hit the crux of the issue: you either believe that education is a public good or you don't. I do. It's costly, but when we have 58,000 young people not in work, training or education, our goal has to be improving accessibility, because we're all better off when we do.
And if we don't? Well here's hoping the Minister of Education knows a thing or two about climbing through windows.
Jacinda Ardern is on Facebook and Twitter @jacindaardern
NIKKI KAYE
Hey buddy,
Great to hear from you and glad to hear all is going well in London. The job sounds amazing. I understand you're a bit grumpy because you've been asked to pay back your student loan, but hey, the country needs it. Between earthquakes in Christchurch and finance and insurance company failures, the old NZ Inc. bank account is looking pretty skinny - about $300 million per week skinny to be precise. That $2.3 billion owed by expats like you would really help out - thanks in advance for your payment mate.
Years of living costs and fees doing both science and law meant my loan got pretty big - although someone reminded me recently that in her day there was no such thing as interest free and I am "lucky" compared to her. However, I pointed out that some people of her generation splurged on overseas holidays and cars as you could just get lump sum payments back then. Anyway the interest free policy has helped us to keep the loans down.
Fieval died a couple of weeks ago - pretty sad but she did have a pretty good nudge. Remember when I got her from the SPCA, she was pretty freaked out but you would be too if at a couple of weeks old your first vehicle trip was on the back of a motorbike. I remember getting into trouble with the flatties for having the heater on too much, but she was such a tiny wee nipper with giant ears and not much fur and that flat was so bloody cold.
Looking back though I probably could have put in more towards the flat power bill - sorry about that. It's pretty tough now for students to live on less than a couple of hundred bucks a week - a lot more people are living with their olds as a result. I know I wouldn't want to go back to being a student - well maybe just for a day to reopen Gardies! The best thing about not being a student has got to be not having to eat 2-minute noodles daily and vegetarian pasta that is actually sausage pasta with the bits picked out. I guess those days did teach us the value of going budget.
One of the hard things about the recession has been meeting a lot of young people who can't get jobs. It is hard because they are really talented and keen, you can see that they that they would do anything for a job or even just some experience. With no extra money we have had to make changes to the student loan scheme so that we can fund about 8000 extra uni places to help keep some of these people off the dole. More than 120,000 people will go to uni this year - more people than ever. It makes you realise every generation has something tough to deal with.
I was talking to some mates the other day about how opening opportunities for people of all backgrounds to get a tertiary education comes at a cost.
Sometimes when something is free, people don't value it the way they should. In the past many students didn't feel obliged to pay back debt and there weren't any incentives to encourage them. We need to help people see their tertiary education as an investment to be paid back, not a blank cheque. The 10 per cent repayment bonus, performance requirements and requiring people to demonstrate a commitment to New Zealand we've put in place is about underlining the value of education.
I think the best things we learned at uni were to be able to think for ourselves and solve problems, understand the importance of self-reliance, resilience and independence, and be brave about backing ourselves.
So buddy, I would really appreciate you paying back your loan because New Zealand needs you!
Lots of love,
Nikki
Nikki Kaye is on Facebook and Twitter @nikkikaye
Do you have a topic you would like Nikki Kaye and Jacinda Ardern to tackle? Email online-editor@nzherald.co.nz
