Interest-free student loans 'bad policy'

30 January 2007

OECD review confirms interest-free student loans 'bad policy'

Business is calling on the Government to heed the OECD's concerns about the wisdom of the interest-free student loan policy.

The OECD's review of New Zealand's tertiary education, released today, said that there was no clear reason to wipe interest for all students and that removing interest for the lifetime of a student loan was "questionable".

"The OECD's comments reinforce the views of the business community that interest-free student loans are a poor use of taxpayers' money," Business NZ Chief Executive Phil O'Reilly said.

"Tertiary education plays a key role in ensuring that New Zealand has the skills to grow and prosper. It is important that we have a student support system that allows all New Zealanders to access these skills.

"But tertiary education is also a very expensive enterprise. We need to have policies that use our resources efficiently and effectively.

"The interest-free loans policy fails these tests.

"The OECD review provides an excellent opportunity for the Government to reconsider interest-free student loans and to put the student support system on a more sustainable footing.

"We urge the Government to seize this opportunity," Mr O'Reilly said.

ENDS

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