A controversial loyalty card has been launched that offers to pay a chunk of a student's bar tab off their student loan.

The Feejoa card sees promoters pay up to 5 per cent of the amount users spend at participating businesses off their student loans. The more they spend, the more is paid off the loan.

Anyone can use the card and those without student loans can donate the discount to someone with one.

Eight bars and the Warehouse Stationery chain have signed up to the scheme and promoters want to expand to other retailers in a bid to help pay off student loans.


But critics say the alcohol connection is alarming.

Community Alcohol and Drug Services regional manager Robert Steenhuisen said the card was "an incentive to consume more", which went against public health initiatives aiming for moderate drinking.

Alcohol Healthwatch health promotions adviser Christine Rogan said it exploited the vulnerable.

"[It's] increasing the risk that alcohol consumption is going to be encouraged through this marketing promotion.

"How ironic that the first [merchants involved] are the ones that encourage students to drink," Rogan said.

Massey University professor Sally Cresswell, who specialises in alcohol policy, said there was a "feelgood" factor to the card but the initial focus on businesses selling alcohol was a sign society still saw alcohol as an ordinary commodity, rather than a drug that should be treated with caution.

"You could just imagine situations where people are saying, 'Oh, well, let's get another round, it's all paying off so-and-so's loan', and I think that's really not appropriate."

But the card's founders say it is aimed at everyone with student loans, which included ex-students.


Hilary Lewis told the Herald on Sunday the founders wanted to "do anything we can to help" those with student loans.

One thousand people - 90 per cent with student loans - had signed up since the card's soft-launch in November. She wouldn't say how much had been paid off loans since Feejoa's launch.

Businesses targeted would be those supplying what students need, she said.

"What do students need? They need food, petrol, utilities," Lewis said. "They need alcohol, entertainment, stationery.

"We are not going to pay all their loan off but if we can help them ... that's a huge benefit for them, for the Government and for the economy."

In a second interview she said they were "not promoting to students" but to those with student loans, especially in the 25-35 age group.

"Warehouse Stationery, with 67 stores, will far outweigh pubs.

"This is not a programme about alcohol, this is a programme about people of all ages with student loans.

"The social issue out there ... is that there's $14 billion of student loan debt."

Lewis said the founders wanted at least 70,000 student-loan holders signed up in the next year and were in talks with two other non-alcohol-related businesses.

The eight bars involved include the Auckland University of Technology's campus-based Vesbar, five other Auckland bars and one bar in Christchurch and Queenstown.

Feejoa signed an agreement with the Inland Revenue Department before Christmas to "work together" so the scheme did not make extra work for the Government department.

An IRD spokesman confirmed the agreement, which was made with the understanding the scheme would extend beyond hospitality businesses.

"We wouldn't have signed it if we weren't comfortable," the spokesman said.

Feejoa pays the money to the IRD, clipping the ticket on the way - taking a 5.75 per cent cut.