Student loan debt ‘balloons’ by 37 per cent, with average student owing $21,000
The average student has nearly $21,000 of debt, with the nominal value of student loan balances sitting at $15.3 billion. Photo / File
Interest-free student loans — a mistake?
«Participation in tertiary education peaked in and has been steadily declining ever since as the effects of a National Government bed in,» he said.
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«Meanwhile the accumulated debt of those who do complete tertiary study has been climbing steadily, increasing a whopping 37 per cent under National compared to just 9 per cent under the previous Labour Government.»
The average loan balance at June 30 was close to $21,000, the report said, while the average time it takes a graduate to repay their loan is now 8.4 years.
Record amounts of student debt are being written off for bankruptcy, with $17.6m wiped from the books in the 2015-16 year. Because of the death of the borrower, $15m was written off.
«National are saddling future generations with huge debt and it’s getting worse not better,» Hipkins said, accusing the Government of trying to «sneak these figures out».
«Declining participation rates are really concerning. If we are to provide all New Zealanders with the opportunity to adapt to the changing needs of the economy and society, and to fulfil their own potential, we need to see participation in tertiary education increasing, not decreasing.»
The number of domestic students enrolled in tertiary education has , which the report said was mainly due to a decline in enrolments in certificate-level qualifications following moves to strengthen quality.
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At June 30 last year, there were 731,754 student loan borrowers, with the nominal value of all loans sitting at $15.3b.
More than 490,000 borrowers have repaid their loans since the scheme began, with IRD collecting close to $11.5m in repayments.
Tertiary Education Minister Paul Goldsmith said New Zealand had «one of the most generous student support systems in the world», spending more than $3.1b on financial support in 2015.
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«New Zealand spends three times the OECD average on financial aid to students, with only the UK spending more,» he said.
«Tuition subsidies paid to providers cover on average 71 per cent of the cost of tuition for most domestic students. In practice, the share borne by the Government is larger because much of the students’ share of compulsory fees is paid by interest-free student loans; increasing its share in the cost of tertiary education to around 82 per cent.
«In 2000, the average student paid 33 per cent of the cost of their education. While in 2015, that figure had reduced to 29 per cent.»
A strengthening economy, creating 250,000 new jobs over the past three years, was the main reason for a decline in those opting for a tertiary education, Goldsmith said.
Universities New Zealand hit back this afternoon, saying graduates make more money, lead happier lives, and are more likely to be employed than those who do not gain a tertiary qualification.
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They are willing to take on the debt of a student loan because they know it creates benefits, Chris Whelan, executive director of Universities New Zealand said.
«Universities New Zealand analysis of Census data clearly shows that degree holders get jobs, pay off their debt, have better job security, and earn more over their working lives,» Whelan said.
The increase in the average loan over the past few years was mostly due to students opting to pursue longer degrees and more higher level qualifications, he said.
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Students were also now more likely to enrol in courses, such as science, technology, engineering, health or environment-related degrees, which have higher fees, Whelan said.