Student loans can take years to pay off but some people can't find jobs or have changed careers. Photo / File / Getty Images
Student loans can take years to pay off but some people can't find jobs or have changed careers. Photo / File / Getty Images
Student loans are a way of life for those wanting to take on most forms of tertiary education. But as Carmen Hall reports, some people may be racking up big bills to prepare for careers it turns out they don't want after all.
The Inland Revenue Department is owed morethan $230 million in student loans from Rotorua residents and one recruitment agency says it is inundated with graduates who can't get a job in their chosen field.
Others simply changed their minds about their career pathway after racking up tens of thousands of dollars in debt.
Data supplied by the IRD reveals 12,421 people with a Rotorua postcode owe on average $18,618.39 each or collectively $231.2m.
1st Call Recruitment managing director Phill van Syp says some graduates were working in other fields after racking up student loans. Photo / File
"You want to get your feet in the field because what you think it is and what it really is, is two different things."
Ki-Taurangi Bradford has a Bachelor of Science degree and is only a few months away from finishing her masters but said her student loan was a "risky" investment.
The 24-year-old owes about $43,000 in student loans to the IRD and while she had secured employment most of her friends at university were still working in cafes.
She was also jealous of countries where you did not have to pay for tertiary education.
"I did sort of see it [student loan] as an investment but I was never sure it was going to be worth it so it was risky. When I was doing my undergraduate studies I wasn't guaranteed to get a job. In science, it can be really hard to get a job.
"The majority of my friends went into working in cafes and they still haven't been able to get a job."
The Scion senior technician was grateful to be employed and have supportive bosses when others were not so lucky.
By her calculation, it would take 10 years to pay off her student loan.
Toi Ohomai Institute of Technology head of student support Dr Logan Bannister said it introduced the Government's one year Fees Free initiative last year.
He said the amount a student may need to borrow can vary significantly but it could be assumed more people were likely to enrol and invest their time in education without having one.
"They also may have more earning potential in the future without the need to repay a student loan. This could have multiple benefits to the individual and their whānau."
Data from Toi Ohomai reveals there were 10,400 local students in 2018 compared with 9900 in 2019 to date.
This year 4046 of the current uptake had not been charged any fees, he said.
Meanwhile, a Waikato University spokeswoman said there were 1065 students studying at its campus in Tauranga compared with 872 in 2018.
Economist Shamubeel Eaqub told NZME last month student loans were just one more stress for a group that could be called more broadly "Generation Debt". Photo / File
Economist Shamubeel Eaqub told NZME last month student loans were just one more stress for a group that could be called more broadly "Generation Debt".
"It adds an additional pressure on this new generation.
"Not only are they dealing with the pressure on the educational front, but housing affordability is getting less and they are taking on additional debt. Everything is compounding with all the pressures we see on young people."
An ANZ spokesman said it would take student loan repayments alongside other expenses into account when potential customers are applying for a home loan.
"We need to ensure they can afford their lending repayments. As with any lending, we encourage customers to consider their options before taking out a loan as it is money you need to pay back."
Student loan interest rates * Interest is added to all student loans each day and added to your loan at the end of the tax year. * If you are a New Zealand-based borrower, interest is added to your loan but is then written off. * If you go overseas your interest will not be written off, but there are some exceptions to this. * The interest rate is set each year. It is currently 4 per cent. - Source IRD
By the numbers * Nationally since 1992, 1.3 million students had borrowed $26.1 billion and 570,000 people had fully paid back those loans. * 91 per cent of $1.3b of overdue loans were owed by borrowers living overseas. - Source Education Counts
