Student debt 'stabilised, repayment times reducing'

A student association survey showing big increases in student debt is unrepresentative and inaccurate, the government says.

The New Zealand University Students' Association says its recent survey showed average student debt had increased by 60 percent in seven years.

Education Minister Trevor Mallard said only 4000 students out of 100,000 students had filled in and returned the survey form. He believed the survey over-represented the problem.

Mr Mallard said the 2004 Student Loan Scheme report showed the time students took to pay off their debt had dropped from 2002 to 2004 and was now down to 9.3 years; previously it was over 10 years.

"The good news for students is that the level of borrowing each year has actually stabilised, student loan repayments are up and repayment times are reducing.

"What is very interesting is that the very high borrowers are the highest earners upon graduation and make the highest repayments, both absolutely and in proportion to their loans."

Half of student borrowers had a loan of less than $10,000 and less than six percent of all borrowers had a debt over $40,000, Mr Mallard said.

Education Forum policy advisor Norman LaRocque said the loan scheme was the most equitable way to cover the cost of tertiary tuition fees.

"The scheme is fair - and it should be expanded, not down-sized - because it gives students access to funds to finance their studies that New Zealand otherwise would find difficult to raise.

"A significant proportion of the benefits of tertiary education flow to students, yet taxpayers currently foot 70 percent or more of the costs. There is no justification for even more taxpayer subsidy and certainly none for 'free' tertiary education."

One recent estimate suggested that, over a lifetime, an employed male degree holder in New Zealand could expect to earn $140,000 more (in today's dollars) than a male with no qualification, Mr LaRocque said.

Tuition fees paid by loans were also fair because they were available to all.

"The reality is that those who attend university are - and have always been - drawn disproportionately from middle and higher income groups, so government subsidies, in the form of student allowances, benefits mainly those groups."

A statement from Education Minister Trevor Mallard is at this web page.