Students prepare for 'black Budget'
Tue, 01 May 2012 6:05p.m.
By political editor Duncan Garner
The Prime Minister has signalled that the interest-free student loan scheme will change in this month's Budget, and there will be new tougher eligibility rules for those getting student allowances.
Labour says students should get ready for what will be a "black Budget".
Students were this afternoon only just coming to grips that Budget 2012 will target them, forcing them pay back their loans faster.
More than half a million students have interest-free student loans.
Last year they borrowed $1.6 billion off the Government, interest-free.
John Key doesn't like the policy, but he's keeping it, and tightening the rules in this month's Budget.
“Effectively they will be asked to pay it slightly quicker,” says the Prime Minister.
The changes will see students forced to pay off more of their loan once they start working and earning above a threshold.
The Government is also likely to further target Kiwi students overseas.
It will save the Government tens of millions of dollars.
“It's good news for them because they will pay off their loan faster and good news for us because our liability decreases," says Mr Key.
“This will be a black Budget for students,” says Labour deputy leader Grant Robertson.
But Business New Zealand says both National and Labour should wake up and ditch the policy because it's so expensive.
“The Prime Minister should get rid of it and Labour should support that,” says Business New Zealand chief executive Phil O’Reilly. “It's poor policy."
There will also be other changes to the $600 million a year cost of student allowances. They will only be available to those in the early years of study, and only those who need them will be eligible.
“It won't be a dramatic change but it will be a directional change,” says Economic Development Minister Steven Joyce.
The Government is also going to change how it funds early childhood education.
Right now it is 20 hours free for all three- and four-year-olds.
But those who can afford it may lose the help, and those who need more assistance will get it.
“Obviously the big area of help is Maori and Pacific kids, and obviously you can expect to see something in that area,” says Mr Key.
Mr Key also says this year's Budget will not be a slash and burn exercise. But it is the second year that it hasn't spent one new dollar, and that is now starting to bite.
Cuts and changes to some areas of education funding will be a real focus in this Budget, with the Government targeting those who need help and taking money away from those who are deemed better off.
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4/05/2012 1:15:34 p.m.
This is all very well for John Key, who would have had the choice of a free Uni education, just as my parent did. Jobs were widely available and education was free. He is just like many people his age who grew up in a time when things came easily and freely, he can't stand the idea of having to share his own wealth and is just feeathering his own nest and those of his friends. I feel sick. I am halfway through my degree and now I will have to change all my plans for post graduate study, as I did a foundation course which took one year. By the time I get to post graduate level (which I have to do to practice) I will have no entitlement left. Don't load us up with huge debt! We are the key to NZs future success, support us don't syphen from us.
2/05/2012 1:53:52 p.m.
Mike B wrote:
@Alex. Fun fact. In Australia your student loan increases by the rate of the CPI figure annually. So no interest free loans and if you study for three years your loan has attracted an increase of +/- 8% before you start paying!!!!
2/05/2012 12:27:06 p.m.
Get Winston in on this.
Put New Zealanders first FFS, don't saddle the youth with huge debt.
2/05/2012 11:04:53 a.m.
fun fact: in australia, the repayment threshold is 4% over $49,096. the highest it goes is 8%, and only if you're earning over $91,178. our current threshold is already punitive
2/05/2012 10:08:03 a.m.
The worst thing is, they charge 10% all year if they can predict you will earn just over 19,000. after tax thats about $315 a week. increase it to 15% and it becomes 297.5. I dont know what national is thinking, noone can live on that!
2/05/2012 9:36:16 a.m.
with 83 000 youth out of work I expect the demand for tertiary education is probably on the increase so perhaps the government sees this as a good place to make cuts, more senseless and unethical cuts as National focuses only on the $ and not on the proper functioning 'society' which means, children and youth first, not last!!
2/05/2012 9:19:35 a.m.
You can say goodbye to the talent. The key point of the interest free student loan was if you stay in NZ then you are better off. Soon, why stay at home? You are talented so go overseas. It's a sad day. Bye NZ. I will miss you.
2/05/2012 8:33:28 a.m.
Well done Karen. It is that attitude that is the reason why this country will never prosper. We as Kiwi's are too quick to just want and point fingers at those that have achieved. The student loan saga will never stop until it becomes compulsory to actually pass the year you are enrolled for to qualify for the next years funding. There are too many "career" students out there, who will study forever and run up major debt. Try paying your loan off Karen and get a good job and feel how good that feels!!!!
1/05/2012 11:08:46 p.m.
the graduate job market is so bad that lots of students are never gonna be able to get jobs to pay the loan back in the first place. owned, national
1/05/2012 10:20:25 p.m.
Wow, really looking forward to this budget, looks like I'll be hit with an increase in Student Loan repayments and an increase in childcare costs. Might as well stay at home, save on childcare and not work, so don't meet threshold on loans....maybe then family would qualify for working for families, yeah that could work. Great for encouraging people to be productive members of the workforce.
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