INDEPENDENT NEWS

Student Support Policy

Published: Tue 26 Jul 2005 01:29 PM
Student Support
Labour’s Vision
Labour believes that every New Zealander is entitled to access quality public education of the highest standard, throughout their lives. Quality education ensures that every Kiwi regardless of who they are and where they come from can achieve their full potential and contribute to New Zealand's society and economy.
Labour is committed to a quality tertiary education and training system that will support New Zealand's economic and social development. Labour wants to ensure that our tertiary education system is focused on quality and relevance. We want to ensure that an integrated approach is taken to tertiary education, and that barriers to participation are eliminated.
Labour's Record
In the area of student support, during the last two terms in government Labour has:
- Tackled unfairness in the student loan scheme. Now no full time student and no part timer on a low income pays interest on their loan while studying.
- Limited fee increases by introducing fee maxima policy.
- Increased parental income thresholds for student allowance eligibility.
- Introduced bonded scholarships to:
-- encourage study in areas of key strategic importance
-- reward our top academic performers
-- encourage participation by underrepresented groups.
Labour's Policy
So far in government, Labour has made a lot of progress towards making tertiary education more affordable, but we know that there is more to be done. While student loans provide vital support and help ensure that all New Zealanders can access tertiary education, repayment times are still longer than we would like and there is evidence that some graduates struggle to keep up with interest repayments.
Student Loans
During our next term in government, Labour will:
- Abolish all interest charges on student loans for all students and New Zealand based graduates from 1 April 2006.
- Provide for an amnesty whereby borrowers who return to New Zealand or enter into acceptable arrangements with IRD for repayment during 2006 will not have to pay IRD loan penalties.
- Continue to ensure that loans are only provided to those studying in approved courses, and that loans for fees are only paid where there is evidence the fees have been paid by the borrower.
- Expand the new financial advisory service provided by Studylink to help students make informed decisions about funding their tertiary studies and make them more aware of their financial commitment when they take out a Student Loan.
Allowances
During our next term in government, Labour will:
- Progressively increase parental income thresholds so that at least half of all fulltime students will receive a student allowance.
- Continue to increase parental income thresholds each year by the rate of inflation.
- Increase the personal income abatement rate for student allowances each year by the rate of inflation.
Tuition Fees
During our next term in government, Labour will:
- Maintain a simplified, capped tuition fee structure to provide certainty as to fee levels to students throughout the duration of their studies.
- Conduct a specific review of the funding arrangements for medical and dental students
Other Tertiary Student Support
During our next term in government, Labour will:
- Extend the successful Step-Up scholarships in areas of skill shortage.
- Double the number of bonded merit-based scholarships from 500 to 1,000 by the end of 2006, with a view to further increasing that to 1,500 by 2008.
- Investigate the viability of a long-term savings scheme for parents saving for their children’s education.
ENDS
Interest Free Student Loans
CASE STUDIES
BEN – LAWYER
Ben has a student loan of around $48,000 and earns around $50,000. Assuming annual salary growth of 3%, under current rules Ben will take 21 years to pay off his loan and pay back a total of $100,089.
Under Labour, Ben will pay back his loan nearly 9 years faster and will only pay back what he owes - $50,000. Ben will save $52,089.
SELENA – MARKETING MANAGER
Selena has a loan of around $40,000 and earns around $45,000 per year. Assuming annual salary growth of 3%, under current rules Selena will take 21 years to pay off her loan and repay a total of $82,086.
Under Labour, Selena will pay back her loan around 9 years faster will only pay back what she owes - $40,000. Selena will save $42,086.
AYESHA – DOCTOR
Ayesha has a loan of around $60,000 and earns around $60,000 per year. Assuming annual salary growth of 9%, under current rules Ayesha will take nearly 12 years to pay off her loan and repay a total of $97,601.
Under Labour, Ayesha will pay back her loan in less than 9 years and pay back what she owes - $60,000. Ayesha will save $37,601.
Comparison of Labour and National's student loan policies using National's examples…
Sharon has a $15,000 student loan and earns $30,000 a year. Under National's policy, Sharon will initially receive an annual tax deduction of $221. At the end of ten years (even if her income remains static) Sharon's debt will be $2,574 lower than it would have been under the current repayment scheme.
Under Labour, Sharon will save $1,050 in interest in the first year and after 10 years her loan will be $9,389 lower than it would have been under the current scheme.
After 10 years Sharon will be $6814 better off under Labour than under National.
Under National, Sharon will still take 17 years and 11 months to repay her loan. Under Labour, she will take just 11 years and 2 months.
Darryl has a $20,000 loan and earns $40,00 a year. Under National's policy, Darryl will initially receive an annual tax deduction of $462. At the end of 10 years (even if his income remains static) Darryl's debt will be $4,392 lower than it would have been under the current repayment scheme.
Under Labour, Darryl will save $1,400 in interest in the first year and after 10 years his loan will be $6,996 lower than it would have been under the current scheme.
After 10 years Darryl will be $2604 better off under Labour than under National.
Under National, Darryl will still take 11 years and 2 months to repay his loan. Under Labour, he will take just 8 years and 7 months.
Katrina has a $50,000 loan and earns $50,00 a year. Under National's policy, Katrina will initially receive an annual tax deduction of $1,013. At the end of ten years her debt will be $10,990 lower than it would have been under the current repayment scheme.
Under Labour, Katrina will save $3,071 in interest in the first year and after 10 years her loan will be $30,338 lower than it would have been under the current scheme.
After 10 years Katrina will be $19,348 better off under Labour than under National.
Under National, Katrina will still take 25 years and 4 months to repay her loan. Under Labour, she will take just 15 years.
All assumptions made are the same as those used in the National Party's scenarios.

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