National's student loan position a barrier to tertiary education quality

The National Party announcement that it would not reverse Labour’s 'no interest' student loan policy means the continuation of an unaffordable and wasteful tertiary education policy whatever the election result, says the Education Forum.

Education Forum policy advisor Norman LaRocque said National's backtrack means it has missed a chance to directly address the problems caused by the interest write-off policy, including:

• little incentive to repay loans
• disproportionate benefits to better-off students
• financial barriers to the quality and performance of the tertiary education sector.

Mr LaRocque said National's proposal for a repayment incentive was a band-aid that would increase the loan scheme's administration costs.

"It may result in some students repaying their loans earlier, but it will be expensive and result in an increasingly complex student loan scheme," said Mr LaRocque.

The policy announcement should also be of concern to groups seeking increased government investment in tertiary education.

"The no interest policy has a high opportunity cost – money used to pay for interest write-offs cannot be spent on increasing teaching and research resources at New Zealand tertiary institutions."

The policy also contributes to the fact that New Zealand spends a much greater amount of its tertiary education budget on student assistance (44 percent in New Zealand versus 35 percent in Australia, 19 percent in Canada, 24 percent in the United Kingdom and 18 percent in the United States), than on direct expenditure on tertiary institutions.

Mr LaRocque said that giving free money to students at the expense of tertiary institutions could leave institutions unable to hire good staff.

"Those who are concerned about the New Zealand tertiary education sector's ability to compete in an increasingly competitive global market should be calling on both major political parties to rethink their student loan policies as part of a broader review of tertiary education financing," Mr LaRocque said.

Vote-buying over student loans disappointing, says Business NZ

Both main parties are vote-buying over student loans, says Business New Zealand chief executive Phil O’Reilly.

"The interest-free student loan policy is costing New Zealanders more than half a billion dollars each year – money that New Zealand as a whole gets no social value from. Adding in 'repayment bonuses' will make that cost even higher.

"This is money that is being diverted from funding teachers, facilities and world-class research.

"We have severe skills shortages in our workplaces and many young people are leaving school without enough skills to contribute to the workplace. Tertiary institutions can’t get the funding to attract and keep key staff.

"There is some good work going on in education policy, but much more needs to be done. Pouring money into interest-free student loans is not addressing our fundamental needs in tertiary education."