National's Key ignorant on loans rules - Mallard

"John Key's statement on Labour's student loan policy shows that he is ignorant of all the checks and balances that have been introduced into the student loans scheme, to remove the level of abuse that National allowed when it was in government," Education Minister Trevor Mallard said today.

"Students will still have debt that they have to pay off so I do not expect Labour's policy to be an incentive for them to borrow more. In Budget 2005 we announced a beefed up student finance advisory service to ensure that students can get good financial advice.

"The way the loan scheme works, it is not possible to get lump sums or a large amount of money upfront or to do unlimited borrowing, so there is very little incentive to take out a loan for this reason.

"When people borrow under the scheme their fees are paid directly to the institution where they are studying, or paid to them if they can show they have paid directly to the institution. The living costs part is paid in weekly instalments, and only while you are studying.

"This is not the first time National has cried wolf.

"When the no interest while studying policy was implemented there were predictions of a massive increase in the number of borrowers. This did not eventuate, with only a slight increase.

"We will continue to review procedures around borrowing and make any changes as necessary to ensure loan balances are not being increased excessively.

"Borrowing must be for living costs (up to $150 a week for living costs while studying), fees and up to $1000 course costs. People with large loans are generally those in courses with high fees that involve long periods of study like medicine. "

"All our costings are based on forecasts and assumptions of behaviour, just like the policy of every other party," Trevor Mallard said.

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