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May 14, 2012 | by  | in News |
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Student Loans Deboned

How pre-Budget student loan announcements affect you

GRADUATES: living under the loan 

Increasing the repayment threshold from 10 to 12 per cent, kicking in after a loan holder earns over $19,084. Tertiary Education Minister Steven Joyce said “changing the repayment amount will not only encourage students to pay back their loans faster, but will allow the Government to invest money back into the tertiary sector.”

Comparatively, the Australian scheme is more progressive—with minimum repayments of only 4 per cent of income over $48,000, rising to 8 per cent with income levels.

Issues have been raised about how this will disproportionally affect some gradates. Green Party student spokeswoman Holly Walker said young families would be most hurt by the Government’s attempt to balance its books.

“About 40 per cent of couples with children aged between 18 and 24 have student loan debt and about 30 per cent of those aged 25 to 34 are also paying off student loans,” Walker said.

Child Poverty Action Group said the changes would hit young struggling
young families.

Spokeswoman Susan St John said the threshold for repayment was already far too low, at an annual income of $19,080, and the 10 per cent repayment rate on income above that threshold is far too high.

New Zealand University Students’ Association president Pete Hodkinson said the issue didn’t lie with the amount of the increase, it is at what point it comes into effect.

“We have a system where the repayment threshold is at $19,084, which is below the poverty line for a lot of students,” he said.

“It’s not the students earning between $40,000 and $80,000 a year we are worried about, it’s the students that are between $19,000 and $30,000 for who that is a significant issue.”

Labour’s Tertiary Education spokesperson Grant Robertson said it could further the New Zealand’s brain drain problem.

“You’re sending a message to graduates— we want more cast members for the GC —because that’s gong to be the impact
of this, sending people off to Australia,” he said.

STUDENTS: building the debt-palace

Changes to student allowances will further restrict those who can qualify for student allowances, and will see students taking on personal debt as the Government tries to cut down on its own borrowing levels.

Up to 5000 students will be affected, with a 4-year freeze on the parental income threshold and a stop to allowances after 200 weeks or 4-years of study.

Previously there had been concessions for students in certain long-term degrees or postgraduate courses, to apply for student allowance, but these have been scrapped.

VUWSA President Bridie Hood said the proposed changes don’t do anything to help students under pressure as they try to support themselves through university as many of them continue to struggle to make ends meet.

“Even with the support that is currently available to them, sixty per cent of students have to work while they study, and as figures released last month show that fifteen per cent of students are living in absolute poverty, unable to afford basic necessities such as food, clothing, and accommodation.”

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Salient is a magazine. Salient is a website. Salient is an institution founded in 1938 to cater to the whim and fancy of students of Victoria University. We are partly funded by VUWSA and partly by gold bullion that was discovered under a pile of old Salients from the 40's. Salient welcomes your participation in debate on all the issues that we present to you, and if you're a student of Victoria University then you're more than welcome to drop in and have tea and scones with the contributors of this little rag in our little hideaway that overlooks Wellington.

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