Students will borrow a billion, make more
National Party Education spokesman Bill English says Labour’s interest free student loans will see students borrow
billions they don’t need and put it into interest-earning bank accounts.
“This policy will see student debt skyrocket. Students can borrow up to about $10,000 per year, on average they
currently only borrow about $6,300 of that. But now that they won’t be charged interest, they’d be mad not to borrow the
extra $3,700 to either spend or put into an interest-earning account.
“Labour will allow more students to borrow more and most of them will.
“Currently just 55% of students eligible for a loan take one out. But now the more than 100,000 students who are
eligible for a loan but haven't yet taken one out have a strong incentive to take out a full student loan and put it in
the bank to earn a nice little nest egg on the taxpayer.
“Even if only half of those students take up the opportunity, the total student debt burden will grow by several billion
in the next four or five years.
“I want to see students get ahead but not at the expense of others. Why should a taxi driver or a carpenter pay all of
the interest on a loan taken out by someone who will potentially have much greater earning power than they do?
“Labour’s arguments about tougher rules for borrowers don’t wash. There is nothing to stop anyone switching from
parental support or paying their own way, to charging it all back to the taxpayer.
“Labour has not thought this policy through. Their desperation in the face of bad polls has seen them grossly
underestimate the cost of this interest free policy,” says Mr English.
Ends