By Patrick Gower
The Government is to stop funding university students who fail and will no longer give them interest-free loans.
Universities have been warned they face the same medicine; they too must perform or lose funding.
Tertiary Education Minister Steven Joyce says the new initiative will benefit both students and the general public.
“It’s to protect both students and taxpayer that makes the contribution,” he says.
The interest-free student loan was Labour's move in 2005 - some labelled it an election bribe.
One-hundred-and-seventy-nine-thousand students take out loans every year, and the debt is now $9 billion.
National says the interest-free component will stay, but Mr Joyce wants to reign the expensive policy in by targeting those who fail.
“Ordinary students who are working hard and getting their degrees and diplomas don't have anything to fear,” he says.
Mr Joyce won't say how much it will save, but the pass rate at universities is 82 percent.
The New Zealand University Students' Association says it's a bad move, but students' views vary.
Mr Joyce also wants the institutions themselves to perform better.
He is threatening to cut the funding of the worst performers - the best will win.
“We're looking at some level of performance funding to ensure each institution gets a reasonable amount of its students through courses,” he says.
National doesn't like the interest-free student loan policy but it is stuck with it because it is a political reality.
It can only screw down around the edges, and Mr Joyce's changes will only save millions on a policy that costs taxpayers billions.
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