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May 7, 2012 | by  | in News |
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Government Abandons Students

Steven ‘Scissor-hands’ Joyce still hurting those he loves.

In a blatant attempt to both distract attention away from the ongoing John Banks saga—and sweep major changes to how the tertiary education system is funded under the rug—Tertiary Education Minister Steven Joyce announced changes to the student loan system and tertiary education directions last week. Adjustments to student loan repayments will see half a million New Zealanders take an effective pay cut and reduce accessibility to student allowances for post-graduate students. In order to get back to surplus in 2014/15 and reduce their $12 billion loan debt, Tertiary Education Minister Steven Joyce has announced an increase to the loan repayment rate from 10 to 12 per cent of income earned over $19,084.

The regime in Australia requires repayments of only 4% of income earned over $48,000 per annum, rising to 8% as incomes rise.

Joyce also said the repayment incentive scheme, which rewarded graduates with a 10 per cent discount on voluntary repayments, would be scrapped saving a further $12m. It will end in March next year. In addition, the government is reducing the eligibility of student allowances, limiting the scheme to the first four years of study. There will also be a four-year freeze on the parental income threshold for student allowances. The government is continuing to uphold their promise to retain interest-free student loans.

Altogether, the changes will improve the value of the loan book by $250m and create around $60m of saving per year. President of the New Zealand Union of Student’ Associations (NZUSA) Pete Hodkinson argues that National’s proposal for the loan scheme is “short-sighted and is likely to have longer-term negative consequences for New Zealand”. He argues that the repayment obligations “will be an impossible burden” for graduates to bear. “To impose extra obligations on people earning only $19,084 per year, or even less, is simply cruel.”

Labour’s Deputy Leader and Tertiary Education spokesperson Grant Robertson says the government’s changes are reinforcing its narrow vision that education is a cost rather than an investment. Robertson questions the logic of the changes, stating, “The government has said that it wants to reduce the student loan balance, so it does not seem to make sense to push a policy that will increase it”.

However, Prime Minister John Key describes the changes as “modest”, and will certainly have “some” impact on graduates. “Some of the savings we make will be reinvested in improving teaching and research within our universities and other tertiary institutions for the next generation of students.”

However, opposition MP’s are left wondering what this will mean for today’s generation of graduates.

“This will put pressure on already struggling graduates trying to set out on their working life”, says Grant Robertson. Hard working young families will also be hit with this money-saving scheme.
Green Party student spokesperson Holly Walker argues, “What Key has failed to acknowledge is that these people are not just young, single professionals.” “Graduates have grown up. A significant proportion of those paying off a student loan are also parents… [who] rightly feel the victim of an intergenerational attack by this government.”

As Joyce made the announcements without issuing a formal statement, Salient will have a follow up story with more detail in a following issue. It will also include further detail on the new directions of tertiary education outlined.

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