A student loan is a good deal, it's free money (no interest) until the student graduates or drops out or starts earning at least $19,084 a year.

Nevertheless, not many parents like to see their school leavers go immediately into debt and have it hanging over them when they start earning and hope to be saving for a house. No wonder Diana Clement finds in our Review feature today, "There has probably never been a more expensive time to be a parent".

By the time a child reaches 18 and may be starting tertiary education, he or she has cost the average parents $250,000 by Inland Revenue's last calculation (seven years ago). Even if the tertiary student stays at home, tuition fees for a three-year degree will cost between $18,000 and $25,000.

More than 90 per cent take out student loans to help cover their fees. They leave with an average debt around $17,000, according to the scheme's latest annual report.


Once they are earning an income repayments are taken compulsorily like tax, though they can repay the debt faster if they wish to.

The latest mean repayment period was 8.4 years, though for those who stayed in New Zealand it was two years shorter.

Six and a half years does not seem too onerous, though it probably means saving for a house cannot start until the person is in their late 20s.

And with house prices at the levels they are, most young people will need more parental support to have much chance of financing their first home.

If it were not for the crippling cost of houses today, and the associated level of rents, the long lamented student loan scheme would probably sit more comfortably with today's generations of students and parents. The scheme has been around now for 25 years.

Many of those who first took out loans will be soon be parents of tertiary students if they are not already.

The generations that remember when university courses cost no more than a nominal few hundred dollars are in their 50s and 60s or older.

They can still be wracked with guilt when they see young people going into debt for further education. But they forget, perhaps, that much more tertiary education is provided today.


All sorts of occupational training involves institutional learning nowadays. If all tertiary education was free and financed entirely by the taxpayer, the quantity would need to be restricted.

Student loans are part of the fabric of life now and have helped make New Zealand better off.