NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

Interest-free student loans - the country's biggest mistake?

Nicholas Jones
By Nicholas Jones
Investigative Reporter·NZ Herald·
17 Aug, 2016 09:08 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

A new report has called for interest to be put back on student loans. Photo NZ Herald by Mark Mitchell.

A new report has called for interest to be put back on student loans. Photo NZ Herald by Mark Mitchell.

Taxpayers have written off more than $6 billion in interest charges on student loans with little benefit to the poorest students, a new report claims.

The New Zealand Initiative has released a report that puts the amount of interest charges written off by the Government at more than $600 million in 2014/15 - and nearly $6 billion since the scheme was launched by Labour in 2005.

Oliver Hartwich, executive director of the right-wing think tank, said interest-free loans subsidised middle and upper class families who could afford to pay, and had not resulted in increased access to tertiary education.

"If we truly care about students from poor households, we should look more closely at the real barriers to study," Hartwich said.

"The Government has had to ration loans to keep richer students from borrowing money to invest in term deposits, and this hurts poor families who struggle with living expenses during study."

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

The report argues money saved from putting interest back on loans could be spent elsewhere, including raising or removing the cap on borrowing for living costs.

Money could also be pumped into improving secondary school education, the NZ Initiative argued.

The call to scrap interest-free loans has been repeatedly rejected by the National Government.

Advertisement
Advertise with NZME.

It also comes as Labour campaigns on scrapping tertiary fees completely for most students, and works on the idea of writing off existing debt for those who take certain public service jobs in the regions.

However, the call to consider the effect of interest-free loans has an ally in the Child Poverty Action Group.

The group released a report this month that said the zero-interest policy had the unintended consequence of allowing the government to put more of the cost of study on to students.

"It is good that interest is not compounding the debt and this makes the total amounts more tolerable. However, this fails to address the core issue of rising fees," the Laybying Our Future report stated.

Discover more

Business

IT accounts for 4.6 million US jobs

22 Aug 06:00 PM
New Zealand|education

Axe interest-free student loans: report

28 Sep 05:51 PM
New Zealand|education

Student loan debt 'balloons'

23 Jan 08:03 PM

"Student loans also privilege the wealthy, as those who are able to afford education are able to pay for their children's tertiary education while taking out the loan to accrue interest and repay at the slowest rate possible."

The action group's report concluded that insufficient income and support provided by government, family or available work meant students took on debt in addition to their student loan.

That included an overdraft, personal loan, credit card, and debt to families.

It recommended evaluating the trade-off between an interest-free policy and bringing back interest together with adequately funding universities and student support.

Currently around 180,000 people attend university.

In January, Labour leader Andrew Little announced in a State of the Nation speech in Auckland that Labour would provide three years of post-school study for every person in the country without a previous tertiary qualification.

Advertisement
Advertise with NZME.

And this month he revealed Labour was working on policy that would see graduates who take certain public service jobs in the regions get a chunk of their student loan wiped.

In 2014, the Government's share of the full cost of each student's tertiary education was 71 per cent, rising to about 82 per cent after the subsidy provided by interest-free borrowing is accounted for.

Tertiary Education, Skills and Employment Minister Steven Joyce has ruled out scrapping interest-free loans, but has said attempting to bring down fees through further Government subsidisation would be unfair on those who chose to enter the workforce rather than attend university.

The net cost of the student loan scheme - cash out, less repayments - last year was around $400 million. That was down from $771 million in 2009/10.

Joyce expects that trend to continue as the Government targets overseas-based borrowers who are in default on their repayment obligations.

Two such borrowers have been arrested at Auckland Airport as they attempted to leave New Zealand after returning temporarily.

Advertisement
Advertise with NZME.
Save

    Share this article

Latest from Business

Business|companies

New World customers warned after ‘password spraying’ attack

12 Jul 02:39 AM
Premium
Property

Auckland retiree faces eviction as ground rent jumps 344%

12 Jul 12:01 AM
Business|companies

Air India crash: Pilot asked colleague why he cut off fuel control switches seconds after takeoff

11 Jul 10:44 PM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.

Latest from Business

New World customers warned after ‘password spraying’ attack

New World customers warned after ‘password spraying’ attack

12 Jul 02:39 AM

New World's parent company Foodstuffs says none of its systems were breached.

Premium
Auckland retiree faces eviction as ground rent jumps 344%

Auckland retiree faces eviction as ground rent jumps 344%

12 Jul 12:01 AM
Air India crash: Pilot asked colleague why he cut off fuel control switches seconds after takeoff

Air India crash: Pilot asked colleague why he cut off fuel control switches seconds after takeoff

11 Jul 10:44 PM
Premium
Fran O'Sullivan: New Zealand must move on from Ardern criticism to get real benefit from Covid inquiry

Fran O'Sullivan: New Zealand must move on from Ardern criticism to get real benefit from Covid inquiry

11 Jul 09:00 PM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP