500,000 students with tax increase
Thu, 03 May 2012 6:04p.m.
By political editor Duncan Garner
Half a million students with interest-free student loans will be forced to pay back more of their loan once they start working under new tax measures outlined by the Government today.
The move is effectively a tax increase or, as Labour put it today, a pay cut.
Students in Otago seemed thankful today about one thing – loans remaining interest free.
But the changes mean a tax increase for the 500,000 students with interest-free student loans.
“In the short term they are going to pay more of their student loan,” says Tertiary Education Minister Steven Joyce.
“This is a pay cut for students,” says Labour deputy leader Grant Robertson.
Currently students pay 10 cents in the dollar towards repaying their loan.
It will rise to 12 cents next year, once they earn above the current threshold of $19,000.
It will save the Government about 70 million a year. Mr Joyce says it will reinvest the savings in education.
“We think two cents is about right,” he says. “It is quite significant at higher income levels."
It means if you are earning $25,000, you'll pay an extra $2.27 per week.
If you earn $38,000, the Government will take an extra $7.28 out of your take-home pay.
At $70,000, you'll lose almost $20 a week from your take-home pay every week.
Labour is critical.
“They're sending a message to graduates,” says Mr Robertson. “Go and cast yourself for The GC because that's impact - sending people to Australia.”
Student allowances will also be limited to the first four years of study, which means thousands of post-graduate students are set to lose out.
“We'll just make it for four years, and otherwise get a student loan,” says Mr Joyce.
“I think it's a shame we rely on the allowance to get us through uni,” says student Sam Sharp.
“It's important to have those support structures in place so we can study,” says student Tarsh Turner.
National is also ditching the voluntary repayment bonus for student loans, worth $12 million, an incentive for students to pay off their loans faster. But it hasn't worked, and students have thumbed their noses at the idea.
So now National is forcing them all to pay more as it embarks on the traditional early-dumping of bad news ahead of the May 24 Budget
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4/05/2012 7:50:07 p.m.
Fact-Many people have moved to NZ because of our easy Student Loans and payment of living Costs etc
4/05/2012 2:12:12 p.m.
Pay it back, and stop this 'free-loader' mentality in NZ.
....and remember if you think you can go overseas to escape 'your' debt, they will catch up with you, and who knows, even revoke your passports ?!
4/05/2012 1:13:33 p.m.
It's an interest free loan, for crying out loud. If you moan about having to pay this back, when so many have abused the system, then it just places students in a very poor light.
4/05/2012 12:39:11 p.m.
I have a student loan and this seems fair to me
4/05/2012 11:54:01 a.m.
Harden up, how can it be a 'tax increase', when the loan is interest free. Is there no end to the entitlement attitude in this country?
4/05/2012 8:20:31 a.m.
Mike B wrote:
Hannes, well said. Kiwi's are selling their country down the tube with this slack attitude we see. The Labour party was the ones who started this "nanna nation" which we all know cannot be sustained. You are so right when you say they have no idea what it is like in other countries. They all want to bugger off to Auss when they graduate, yet not one has said they will go and study there. Is it because you actually pay more and get charged interest on your loan? But never fear, there are heaps of graduates who paid for their own education who are more than willing to move to New Zealand to make a difference. Let’s see just how long Australia are going to take these losers that want to run away. To Hannes-hou die blink kant bo!
4/05/2012 8:11:20 a.m.
Uni Student wrote:
@HANES. How can you possibly think making students having to get loans at 18% interest is a good idea?
The way it is now is good. If there were no interest free loans, there would be much less incentive for me to study.
In a way these loans are an investment in our young generation
s future. A higher qualification results in a better, higher paying job and a higher payment of tax. If we all decided to just 'get a job' then society would be worse off for it.
In saying that, I don't think this 2% increase is going to affect anyone too much. As long as student loans remain interest free, students will be happy. That's the thing I love about his country, that the Government can actually help people through welfare, student loans etc. If that were to change and become something like what they have in the U.S then that would be sad.
4/05/2012 7:43:55 a.m.
Is the Student Loan not a binding contract between the Student and the Crown? I find it a bit disconcerting that one party to the contract - The Crown - can arbitrarily and unilaterally change the terms and conditions of the contract without consultation with the other party and with no recourse available to the student.
4/05/2012 7:39:40 a.m.
500,000 more student voters,national party are no mates party
4/05/2012 12:11:42 a.m.
I really don't see how anyone can moan about paying back a debt at 12c in the dollar..this is ridiculous it is less than you are made to repay a WINZ loan or a traffic fine... Shut up whingey babies!!! Also I do agree with a 4yr limit on student allowance. I am aware of lots of people who choose to "study" because it's easier to get a student allowance than to go on the unemployment benefit. A few years ago I was introduced to a woman who had no shoes on, a hole in her trackies and only 1 tooth in the front of her mouth and she was undertaking her 3rd year long training course..you honestly think anyone is gonna employ her or that she actually wants to work, she just picks a new course and plods along...limiting the allowance to 4yrs will weed out these types of people. As for people who undertake degrees of longer than 4yrs, maybe you should get a part time job at the very least you should be made to sign a contract binding you to working in NZ in your chosen profession for a minimum of 24mths after qualifying... Pay it back or don't take it out!!! Much like those of us in the grown up work for a living world do
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