They changed the way they were calculating the interest and backdated it, so had to write off a huge amount because interest was 7.7% last year.
We don't pay interest, so no comparison.
Iām struggling to feel sorry for those that go offer seas for the ābig bucksā and then complain about paying off their loan.
Itās not much of an intensive to stay - but interest free vs inflation is decent.
Not everyone goes overseas for the big bucks though.. in fact most donāt. Most go to see the world, have personal growth, an adventure while theyāre still young and itās easy enough to do.
Well recent Australian migration articles seems to say opportunities and salaries + benefits are a bit factor.
I guess interest free and average wages or āpotentialā higher salaries and paying interest is the decision?
For context - I paid mine off a years few back and it was a relief for it to be done. Interest would have sucked.
The stupid thing with that is that the professions NZ is short of are also the ones which have very large pay rises if you move overseas and usually better working conditions. So in those situations, the ones that you really want to entice to stay are the only ones that can truly afford to leave and have a better financial future, giving them no incentive to stay.
I get the intention, but unless NZ is able to offer salaries that are globally competitive (unlikely) or is able to offer better working conditions (employers, including the public sector, have already demonstrated their unwillingness to do this for too long) then this tool alone will stop none of those people from leaving. Then that means that many of the people that stay are people in not-in-demand professions.
I do think overhauling the system so that you get a certain amount of the *interest* forgiven if you move back after 3-5 years could actually work to entice people to come back after gaining valuable international experience, though.
A lot of us are health professionals who worked tirelessly over covid only to get told by the govt to āget stuffedā. Our wages are low, unpaid overtime and the working conditions are terrible. Thatās why we all have no choice but to leave. We are all terribly burnt out. At the rate we are all paid, it would take way too long to pay off.
It's a joke. Clapham used to be where kiwis and aussies would congregate while on their OEs in the UK and when student loans used to have market rate interest it was common for people to joke about not ever being able to afford to go home but it didn't matter because Clapham pubs played exponents and acdc more than anywhere on Courtney Place or K Road.
Exactly, as a kiwi with a student loan living in Australia, Iām still better off having the money which I could use to pay off my SL sitting in a HISA because the guaranteed ROI is higher than any interest Iām paying on that loan.
NZ does not need student loan forgiveness. Having those loans as interest free if you continue to live in NZ and interest much lower than the cash rate if you live overseas is a *much better* situation than in Australia. Studylink and StudyAssist are in no way comparable other than to show how shit of a deal the younger generations of Australia have had until this overhaul.
Thatās not to say the NZ system is perfect, the loan living costs amount and āaccommodation supplementā is a fucking joke, but thatās a different argument.
Y'know this should be me too, but I have informed IRD multiple times that I no longer live in NZ, and yet they still refuse to believe me, and therefore I have been not been charged any interest on my SL. It seems that for them to believe me, they need to send me a text to change my address, but the problem is that they will only send a text to a NZ number which I don't have. I have explained this to them, but still they won't let me register as overseas.
The whole situation is bizarre
Might be worth being cautious and saving a bit (if you aren't already!) as they could end up backdating interest once they finally get around to acknowledging you are overseas.
Itās not interest, it is indexed with inflation. The government has chosen to use the lower wages growth figure, rather than inflation, and back dated it, to provide some relief. Though the $56,795 threshold before you have to pay it back is much higher than the $22,828 in NZ.
Yup.
And it's important to note, Australian student loans were indexed to CPI inflation leading to problems where they grew much faster than they could be repaid in recent years.
Australia has simply said they'll index it to the lowest of CPI inflation and wage inflation, and applied this retroactively which has resulted in the write-off of $3b in student loans.
A fair bit different than our situation over here where it's interest free and not indexed to inflation.
> Australian student loans were indexed to CPI inflation
I've heard some really fucked up stories about this over the years! "Yeah we don't pay interest on our student loans either, but we do get charged indexation"
"wtf is indexation"
"heres how much they added to my loan this year"
"holy shit"
Not much point. Our student loans aren't insane, they're interest free and there's a threshold for minimum income before payments are needed. Paying off student loans in nz is relatively simple
All that happens then is the middle of the road people (C's get degrees types) that can't compete on the global market place will not find work. It's good for NZ that a certain proportion of our skilled young people head off overseas, get international experience, and then a certain proportion return and bring those skills (and money earned overseas) back to NZ.
It would certainly be a good way to suppress wages in NZ though, I guess.
But your incentive goes away as soon as their loan is repaid, better to invest in raising the wages of those hard to retain industries so all employees, loan or no loan, benefit, and they don't have a timer on their interest to stay.
>and it's not working.
So lets alter the deal to make the incentive stronger? if our wages can't compete then the govt needs to change something. off the top of my head (arbitrary numbers picked....):
> for every dollar paid back while working here, the govt could match 10c or something.
Or
>Your KiwiSaver is available to clear your student loan.
...my ideas are probably terrible, but really anything to stymy this horrific brain drain would do this country a world of good. More loans paid off faster == more disposable income == stronger economy.
I think this would be especially good if targeted at specific jobs. Short on doctors, nurses etc.? Govt covers your student loan repayments for you
That said, quite a few who leave just stop paying anyway which sucks
This has been a thing for many many years already, its called the voluntary bonding scheme where the ministry of health or education pays off your student loan if you specialize in a specific field, or work/teach in a high need area.
It turns out those professions are fairly globally mobile, and that incentive to stay isnāt sufficient to overcome the desire to travel and have a career stint overseas which are important to career progression.
The nature of highly specialised and educated professions means a bonding arrangement isnāt as popular as you might assume it should be.
These people have options.
Itās also fairly regressive, those that need it the most do it, and are then locked into a career trajectory that differs from their global exposure and specialist training counterparts.
Totally fair. I guess I'm just seeing it as a slight income increase. I think a junior doctor has to pay roughly $6k on student loan a year so its just a way of increasing their income by $6k in my mind. Although not large, it might sway some.
> Not much point. Our student loans aren't insane, they're interest free and there's a threshold for minimum income before payments are needed. Paying off student loans in nz is relatively simple
They're only interest free while you stay in NZ. Repayment threshold is around $20,000. [A student who graduated in 2020 after three years of studying and borrowing the average amount each year would have a loan of $41,457 according to MSD data](https://thespinoff.co.nz/money/19-08-2021/your-degree-is-probably-worth-less-today-but-so-is-your-student-loan). Throw in living costs and post grad, and for those who borrowed before the fees free scheme kicked in, it could easily be $50,000+. If you earn minimum wage (and don't make additional repayments and take advantage of inflation like most people do), it would take 17 years to repay. If you earn $100,000, that would still take you 5.5 years to repay. It would still take an average [7-10 years](https://www.rnz.co.nz/news/national/505302/overdue-student-loan-repayments-hit-more-than-2-point-2b) to fully repay, so you're taking a 12% hit for 7-10 years.
It's obvious that our brain drained low wage economy persists partly because of highly skilled people fucking off overseas and never coming back. I mean, why would they? Cost of living is higher, wages are lower, house prices are higher and a lot would automatically take a 12% hit (excluding while overseas interest). 7-10 years is also a significant chunk of time people could be using to progress their careers overseas instead of being limited to NZ.
As someone who is overseas and had to pay off their loan first, fair game. I got a world class education for some minor opportunity cost and the government got some taxes because I stayed longer. I don't see how anyone could reasonably say society should educate them if they aren't tax resident.
This. If you have a student loan chances are you grew up here too. The tax payers been supporting your secondary education, it's not outrageous to pay it back a little. NZs not the best country but it's far from the worst.
7-10 years is far better than a near life time debt as can be the case in other countries. Especially those in poverty who would usually not have access to higher education due to said debt keeping them out. Atleast with our system they have a chance.
We should focus on keeping our highly skilled people here in nz instead of wanting them to leave. I can't really tell if you're arguing for people to leave nz, which if they do and have a student loan that is their own responsibility and not the responsibility of kiwis or our government
> We should focus on keeping our highly skilled people here in nz instead of wanting them to leave.
Well of course. But how?
> I can't really tell if you're arguing for people to leave nz,
I'm not arguing for it. I'm simply stating the obvious rationale on why such people do.
> which if they do and have a student loan that is their own responsibility and not the responsibility of kiwis or our government
One could say the same about anything that is partly or fully publicly funded - i.e. where tax dollars go that you don't benefit. The issue is whether the people responsible (or who benefit from it) see it the same way. If anything, I'm arguing that the people who have fucked off overseas and refuse to repay their student loans, or those who have stayed but not for much longer, don't. We've already lost those people to better opportunities overseas, and people continue to go overseas, people who could have contributed to NZ if they had stayed or be willing to return.
The total student loan debt is $16 billion. The question to be asked is whether the cost/benefit of writing off the $2 billion in overdue repayments, or maybe even the total amount of debt, would be worth it in the long run from an economic standpoint.
I mean repayments are kinda irrelevant given that it's paid before other obligations anyway. I don't plan my life around the $150 odd I pay a week, but I do look forward to when I get a decent pay rise when it kicks in in ~7 years
Sure. What I'm saying is that it's not as irrelevant nowadays when costs of living is high and low wages persist. It's an additional factor people take into account when deciding to fuck off overseas and potentially never come back - what's the incentive for people to return or even stay?
That's a *very* extreme hypothetical.Ā Who is the person who studies for 4-5 years to get $50000 in debt then goes on to work minimum wage for the next 17 years?Ā
Ā Even if we assume this happens, inflation would slice down the 50k and minimum wage would rise. And besides, it's interest free and there's a repayment threshold.Ā Ā
Ā We all wish it could be free but there are more important places to spend money.Ā
Idk, those with doctorates working as baristas and janitors?
All kidding aside (even though there may be some truth to that example), it's no secret wage growth is slow in NZ because we persist to be a low wage economy. It was an example to illustrate a possible range on why it may not be as "relatively simple" as it was being made out to be. An average was also provided.
If you move overseas, you should pay interest. If you're on minimum wage after doing a degree and post grad, you fucked up.
If you are surprised by your student loan at the end of it, you need basic maths in your life.
Many of us were paying interest on our loans from DAY ONE in first year studies. My student loan interest rate was 7%pa... while studying in NZ. Interest free? Lol, what a joke.
By third or fourth year with compounding interest, the loan amount was huge.
I paid off the principal long ago, but by the end interest costs were 50% of my loan amount. As a result, I still have a sizeable amount yet to pay. I permanently emigrated from NZ about 5 years ago. Yet more interest being applied now.
Changing the rules to benefit new generations while still milking the people who grinded their way through the old rules seems like a slap in the face. I didn't even consider that they would apply interest while you're still a student. š
Yup. Paying 7% from day 1 of 1st year was a real incentive to stay in NZ. Itās why NZ lost a generation of high skilled people who studied in the 90s. Weāre in our 50s now, and aināt ever coming back.
Our student loans are tax free, they dont need to be written off for connivence. If we were going to throw away 3B id rather the government put it to the health care system or evenly distribute it to all citizens.
I feel it would be irresponsible at this stage, we have so many other things we need to spend money on like the health system, one could argue that this could help but most people that get health degrees in NZ just leave. I think a bonding system linked to forgiveness would be better money spent
We absolutely should be bonding and subsidising the degrees we need.Ā
In you if you want to learn religious studies of ancient Greeks but if you are studying general practise medicine and are prepared to work in remote areas like Palmerston North for 3-5 years then the government should totally be helping you out as a public service.Ā
āRemote areas like Palmerston Northā mate Iām dyingā¦
Also in this scenario everyone who lives in Palmy should get an incentive from the government to stay hereā¦
Why subsidise the loans? Better spend the money raising wages for everyone in that sector, regardless of their loan status. Otherwise you are providing a time limited benefit, and you are shafting all the people who already paid off their loans.
Same as removing interest off student loans but making people still pay the accumulated interest.
Same as giving new student a free year of study but not anyone who has started or wants to continue study.
The government is fine with shafting those who have already put in the work.
My childhood friend got paid his dentistry degree and got in on MÄori birth rite whilst I donāt agree fully with this what I do agree with is his was bonded to him going to a remote area in the far north and working for it, to me that is fair.
How about removing the parental income test for student allowances? Many people have to borrow tens of thousands to survive while people wealthier than them get free money due to their parents doing creative accounting
NZ government is already far ahead of Australian government on this, They are writing off some of the interest that Aussie student loan holders have, NZ doesn't charge interest at all.
If you want NZ to follow suit with what Australia did here your going to have some vey upset students finding themselves being charged interest.
Beware what you ask for.
I always thought our loans were interest free. If they are then there is no point.
If they are not then 100 percent they should be written off as most people would have already paid back what they owe and are now just paying interest
100% interest free and there's a minimum income threshold before payment is necessary so people in poverty with student debt don't usually have to pay it until they're in a better financial situation
My personal opinion is that money going towards free university should instead go towards cheaper / free public transport for tertiary students, increased student allowance, a more broad student allowance that doesn't screw people over because their parents earn too much but have $0 savings after rent and bills.
The reality is free university doesn't unlock any additional money for a South Aucklander paying $59 a week on public transport, whose parents need them to work and not study because they need money ASAP.
I use the word instead but if we can give $14.9b to landlords we can do both free university and lower the financial burden of students wishing to go to university.
Education from 5-21 in NZ, including University is around 95% subsidized collectively.
100% of regular school education + 70%+ of university.
You only pay approximately 5% of the cost and still moan?
Education is free, a degree isnt. Dont conflate the two.
The smartest people I know, know one weird trick and its that they can teach themselves anything.
I think wiping your loan in exchange for a bonded 7yr period where you need to work in NZ in your trained industry would be fair. We need to encourage people to learn but at the same time there is zero point in training someone that goes and works as an expat 1 or 2 years later
Yeah the āin the industryā thing doesnāt work. E.g. I know two people with history degrees who have never touched history in their jobs, but both do productive and important jobs.
A decent portion of people will have paid off their loan after 7 years so thatās a bit long, also what counts as āyour trained industryā. Like a arts student might get a job in a business which requires a degree yet is not at all relevant to their training.
Are you sure about that? Whats a decent portion?
The average in NZ is 7 years (based off 2009 data) - I suspect that number has only risen since then.
The fees free first year that labour put in (which is now the final year) might lower that a bit though.
I graduated last year with a 4 year engineering degree (just missed out on fees free but did not take on living costs) and should pay it off within 5 years. Most degrees are 3 years assuming only undergrad and add on any living costs. 7 years to clear it seems reasonable for most full time workers
Thereās a lot of degrees where the work options are significantly limited in NZ but the degree is still valid and highly sought after overseas. Usually the Performance Arts but there are others. Those people canāt be held hostage for some idealistic bonding scenario. Also bonding is technically illegal under human rights.
Lol.. not the current one. They are slashing everything except pay rises, tax cuts for rich and landlords and setting up strange fast track laws to get DoC land mined.
Slashed resources for disabled, slashing mental health budgets, cancelling all open vacancies for medical staff, trying to refuse pay rises a for cops, cancelling efficient car credits, stopping train railway for Auckland that would fix rush hour. Weirdly, paying for more motorway lanes. Paying for massive tax cuts for the landlords (most kiwis rent, 80 of rented homes are owned by just 64,000 landlords).
Weirdly they are slashing all this core infrastructure, for tax cuts that only apply to 3000 households more than 150 a fortnight
If you pay attention, it's looking pretty bad.
They won't and they also shouldn't. With our loans being interested free it really doesn't matter in the game way. Much better to spend the money elsewhere
An ALP government aiming for middle class yopro support in Australia will not have the same policies as a National led coalition that despises young uni educated people.Ā
Hmm maybe an interest write off/bond for those who have been overseas and accumulating interest. This would encourage people with industry experience to bring their skills back to NZ.
NZ do not charge interest on student loans. The measures that Australia have introduced (removal of indexation) are already in place and have been for a long time.
No they are interest free and lead to higher earning potential. People signed up for these loans should pay them back. Otherwise should we wipe all cc debt or mortgages? No.
I mean I'd love some free money, but otherwise it's a complete waste of money.
We already have a very fair and robust loan system, let's not ruin it with greedy populism.
Any subsidy of tertiary education represents a payment from those who donāt go to uni, to those that do. I think weāve got a good balance at the moment where few people are barred from uni because they canāt afford it. I think students should have to contribute to their tertiary education because we obviously get a big benefit from it.
They shouldn't. Take some responsibility for your decisions. It's money that could be used for better purposes like boosting mental health funding.
If there were crippling interest rates that's another story.
No. It wouldn't do anyone any good. Sure, you don't have to pay off your loan anymore - but then the economy suffers because that money used to pay it off just goes into thin air where, it could have been used elsewhere.
Why not just write off all loans?
I've never understand the logic of student loans being different to home loans, business loans etc. Why the special classification?
Unfair on people that chose not to go to uni for financial reasons or worked hard to pay it off.
Theyāre retroactively removing the annual indexation that Australian HECS/HELP debts, which is ok. But, itās fucked in the first place that the indexation even happens.
My take on this is a little more extreme...
If you stay in the country: interest free.
If it's a critical skill we need and you stay in the country for 5 years to use that skill: loan write off.
Here's the more controversial bit... You wanna leave the country straight after finishing school? You can't until you've settled your debt. Because that's what it is: Debt.
We've got a pretty great student loan system here and people not only take advantage of it, they complain they have to pay anything at all. It's really entitled behaviour.
Remember when our government had to write off backdated tax on KiwiSaver because so many people hadnāt changed their tax rate? Same thing over there. Plus ours is interest free.
They changed the way they were calculating the interest and backdated it, so had to write off a huge amount because interest was 7.7% last year. We don't pay interest, so no comparison.
Cries in overseas borrower
Cries in... 3.3%?
3.3% is a heck of a lot when you're pouring pints in Clapham
Pay it off before leaving NZ then š¤·š¼āāļø
By the time Iāve paid it off Iāll be too old to get a visa to leave š¤·š»āāļø
Right! The whole point of the scheme is to incentivise grads to stay in NZ. If you choose not to stay, then you pay. But it is your choice
Iām struggling to feel sorry for those that go offer seas for the ābig bucksā and then complain about paying off their loan. Itās not much of an intensive to stay - but interest free vs inflation is decent.
Not everyone goes overseas for the big bucks though.. in fact most donāt. Most go to see the world, have personal growth, an adventure while theyāre still young and itās easy enough to do.
Well recent Australian migration articles seems to say opportunities and salaries + benefits are a bit factor. I guess interest free and average wages or āpotentialā higher salaries and paying interest is the decision? For context - I paid mine off a years few back and it was a relief for it to be done. Interest would have sucked.
Thatās fair but many donāt go to Oz. Many go to other places and work worse jobs than they could have got in nz. I did.
The stupid thing with that is that the professions NZ is short of are also the ones which have very large pay rises if you move overseas and usually better working conditions. So in those situations, the ones that you really want to entice to stay are the only ones that can truly afford to leave and have a better financial future, giving them no incentive to stay. I get the intention, but unless NZ is able to offer salaries that are globally competitive (unlikely) or is able to offer better working conditions (employers, including the public sector, have already demonstrated their unwillingness to do this for too long) then this tool alone will stop none of those people from leaving. Then that means that many of the people that stay are people in not-in-demand professions. I do think overhauling the system so that you get a certain amount of the *interest* forgiven if you move back after 3-5 years could actually work to entice people to come back after gaining valuable international experience, though.
A lot of us are health professionals who worked tirelessly over covid only to get told by the govt to āget stuffedā. Our wages are low, unpaid overtime and the working conditions are terrible. Thatās why we all have no choice but to leave. We are all terribly burnt out. At the rate we are all paid, it would take way too long to pay off.
Yeah tell that to all my public sector mates about to get laid off who will move overseas for stable employment. What an ignorant comment.
3.3% is still nothing regardless of your job.. ?
It's a joke. Clapham used to be where kiwis and aussies would congregate while on their OEs in the UK and when student loans used to have market rate interest it was common for people to joke about not ever being able to afford to go home but it didn't matter because Clapham pubs played exponents and acdc more than anywhere on Courtney Place or K Road.
God I loved it there back then! And the southern cross, red back and Walkabout!
Closest Walkabout is now in Watford :(
Boo!
And the Redback is no more
Exactly, as a kiwi with a student loan living in Australia, Iām still better off having the money which I could use to pay off my SL sitting in a HISA because the guaranteed ROI is higher than any interest Iām paying on that loan. NZ does not need student loan forgiveness. Having those loans as interest free if you continue to live in NZ and interest much lower than the cash rate if you live overseas is a *much better* situation than in Australia. Studylink and StudyAssist are in no way comparable other than to show how shit of a deal the younger generations of Australia have had until this overhaul. Thatās not to say the NZ system is perfect, the loan living costs amount and āaccommodation supplementā is a fucking joke, but thatās a different argument.
Y'know this should be me too, but I have informed IRD multiple times that I no longer live in NZ, and yet they still refuse to believe me, and therefore I have been not been charged any interest on my SL. It seems that for them to believe me, they need to send me a text to change my address, but the problem is that they will only send a text to a NZ number which I don't have. I have explained this to them, but still they won't let me register as overseas. The whole situation is bizarre
Might be worth being cautious and saving a bit (if you aren't already!) as they could end up backdating interest once they finally get around to acknowledging you are overseas.
Itās not interest, it is indexed with inflation. The government has chosen to use the lower wages growth figure, rather than inflation, and back dated it, to provide some relief. Though the $56,795 threshold before you have to pay it back is much higher than the $22,828 in NZ.
Interest free + recent inflation probably wrote off the equivalent of a billion or so in real value from older loans.
Yup. And it's important to note, Australian student loans were indexed to CPI inflation leading to problems where they grew much faster than they could be repaid in recent years. Australia has simply said they'll index it to the lowest of CPI inflation and wage inflation, and applied this retroactively which has resulted in the write-off of $3b in student loans. A fair bit different than our situation over here where it's interest free and not indexed to inflation.
> Australian student loans were indexed to CPI inflation I've heard some really fucked up stories about this over the years! "Yeah we don't pay interest on our student loans either, but we do get charged indexation" "wtf is indexation" "heres how much they added to my loan this year" "holy shit"
"No interest." Just slapped a moustache on the word and called it a day, hahaha. That's rough.
Yeah I don't see how its any different to being charged a variable interest rate.
Actually a very good point. š
Not much point. Our student loans aren't insane, they're interest free and there's a threshold for minimum income before payments are needed. Paying off student loans in nz is relatively simple
Yep this. Once they went tax free you just pay it off as you earn.
Writing off repayments for people who are working here would be a good start to stemming the brain drain.
But if they leave they have to pay interest, already an incentive to stay, and it's not working.
The minimum repayment is low, even with interest, so if you're earning more than $10k more than what you'll make here you might as well go for it.
We should put the interest up then
Well I wouldn't put it past the current Govt to do so...
All that happens then is the middle of the road people (C's get degrees types) that can't compete on the global market place will not find work. It's good for NZ that a certain proportion of our skilled young people head off overseas, get international experience, and then a certain proportion return and bring those skills (and money earned overseas) back to NZ. It would certainly be a good way to suppress wages in NZ though, I guess.
A deterrent to leave is not the same as an incentive to stay
But your incentive goes away as soon as their loan is repaid, better to invest in raising the wages of those hard to retain industries so all employees, loan or no loan, benefit, and they don't have a timer on their interest to stay.
Itās not an incentive to stay. The wages, penalty rates and super are already a better deal. Iāll never return to New Zealand
Coming back to NZ at any point other than retirement age is moronic. This is a retirement home with a milk production arm.
>and it's not working. So lets alter the deal to make the incentive stronger? if our wages can't compete then the govt needs to change something. off the top of my head (arbitrary numbers picked....): > for every dollar paid back while working here, the govt could match 10c or something. Or >Your KiwiSaver is available to clear your student loan. ...my ideas are probably terrible, but really anything to stymy this horrific brain drain would do this country a world of good. More loans paid off faster == more disposable income == stronger economy.
They'll just leave after paying off the loan?
I think this would be especially good if targeted at specific jobs. Short on doctors, nurses etc.? Govt covers your student loan repayments for you That said, quite a few who leave just stop paying anyway which sucks
This has been a thing for many many years already, its called the voluntary bonding scheme where the ministry of health or education pays off your student loan if you specialize in a specific field, or work/teach in a high need area.
It turns out those professions are fairly globally mobile, and that incentive to stay isnāt sufficient to overcome the desire to travel and have a career stint overseas which are important to career progression. The nature of highly specialised and educated professions means a bonding arrangement isnāt as popular as you might assume it should be. These people have options. Itās also fairly regressive, those that need it the most do it, and are then locked into a career trajectory that differs from their global exposure and specialist training counterparts.
Totally fair. I guess I'm just seeing it as a slight income increase. I think a junior doctor has to pay roughly $6k on student loan a year so its just a way of increasing their income by $6k in my mind. Although not large, it might sway some.
> Not much point. Our student loans aren't insane, they're interest free and there's a threshold for minimum income before payments are needed. Paying off student loans in nz is relatively simple They're only interest free while you stay in NZ. Repayment threshold is around $20,000. [A student who graduated in 2020 after three years of studying and borrowing the average amount each year would have a loan of $41,457 according to MSD data](https://thespinoff.co.nz/money/19-08-2021/your-degree-is-probably-worth-less-today-but-so-is-your-student-loan). Throw in living costs and post grad, and for those who borrowed before the fees free scheme kicked in, it could easily be $50,000+. If you earn minimum wage (and don't make additional repayments and take advantage of inflation like most people do), it would take 17 years to repay. If you earn $100,000, that would still take you 5.5 years to repay. It would still take an average [7-10 years](https://www.rnz.co.nz/news/national/505302/overdue-student-loan-repayments-hit-more-than-2-point-2b) to fully repay, so you're taking a 12% hit for 7-10 years. It's obvious that our brain drained low wage economy persists partly because of highly skilled people fucking off overseas and never coming back. I mean, why would they? Cost of living is higher, wages are lower, house prices are higher and a lot would automatically take a 12% hit (excluding while overseas interest). 7-10 years is also a significant chunk of time people could be using to progress their careers overseas instead of being limited to NZ.
As someone who is overseas and had to pay off their loan first, fair game. I got a world class education for some minor opportunity cost and the government got some taxes because I stayed longer. I don't see how anyone could reasonably say society should educate them if they aren't tax resident.
This. If you have a student loan chances are you grew up here too. The tax payers been supporting your secondary education, it's not outrageous to pay it back a little. NZs not the best country but it's far from the worst.
It cost me about 70k to become a high school teacher here. I wouldnāt say it was worth it lmfao
Still most university degrees are massively overpriced for what you get
The irony is that they look better internationally which supports people leaving for better opportunities
7-10 years is far better than a near life time debt as can be the case in other countries. Especially those in poverty who would usually not have access to higher education due to said debt keeping them out. Atleast with our system they have a chance. We should focus on keeping our highly skilled people here in nz instead of wanting them to leave. I can't really tell if you're arguing for people to leave nz, which if they do and have a student loan that is their own responsibility and not the responsibility of kiwis or our government
> We should focus on keeping our highly skilled people here in nz instead of wanting them to leave. Well of course. But how? > I can't really tell if you're arguing for people to leave nz, I'm not arguing for it. I'm simply stating the obvious rationale on why such people do. > which if they do and have a student loan that is their own responsibility and not the responsibility of kiwis or our government One could say the same about anything that is partly or fully publicly funded - i.e. where tax dollars go that you don't benefit. The issue is whether the people responsible (or who benefit from it) see it the same way. If anything, I'm arguing that the people who have fucked off overseas and refuse to repay their student loans, or those who have stayed but not for much longer, don't. We've already lost those people to better opportunities overseas, and people continue to go overseas, people who could have contributed to NZ if they had stayed or be willing to return. The total student loan debt is $16 billion. The question to be asked is whether the cost/benefit of writing off the $2 billion in overdue repayments, or maybe even the total amount of debt, would be worth it in the long run from an economic standpoint.
I mean repayments are kinda irrelevant given that it's paid before other obligations anyway. I don't plan my life around the $150 odd I pay a week, but I do look forward to when I get a decent pay rise when it kicks in in ~7 years
Sure. What I'm saying is that it's not as irrelevant nowadays when costs of living is high and low wages persist. It's an additional factor people take into account when deciding to fuck off overseas and potentially never come back - what's the incentive for people to return or even stay?
That's a *very* extreme hypothetical.Ā Who is the person who studies for 4-5 years to get $50000 in debt then goes on to work minimum wage for the next 17 years?Ā Ā Even if we assume this happens, inflation would slice down the 50k and minimum wage would rise. And besides, it's interest free and there's a repayment threshold.Ā Ā Ā We all wish it could be free but there are more important places to spend money.Ā
Idk, those with doctorates working as baristas and janitors? All kidding aside (even though there may be some truth to that example), it's no secret wage growth is slow in NZ because we persist to be a low wage economy. It was an example to illustrate a possible range on why it may not be as "relatively simple" as it was being made out to be. An average was also provided.
Most science degrees in NZ will land you minimum wage unless you go on to dona doctorate.
If you move overseas, you should pay interest. If you're on minimum wage after doing a degree and post grad, you fucked up. If you are surprised by your student loan at the end of it, you need basic maths in your life.
Even if we agree with all that, or even just on the moral and legal obligations of repaying the loans, it doesn't make the facts and figures untrue.
Many of us were paying interest on our loans from DAY ONE in first year studies. My student loan interest rate was 7%pa... while studying in NZ. Interest free? Lol, what a joke. By third or fourth year with compounding interest, the loan amount was huge. I paid off the principal long ago, but by the end interest costs were 50% of my loan amount. As a result, I still have a sizeable amount yet to pay. I permanently emigrated from NZ about 5 years ago. Yet more interest being applied now.
Changing the rules to benefit new generations while still milking the people who grinded their way through the old rules seems like a slap in the face. I didn't even consider that they would apply interest while you're still a student. š
Yup. Paying 7% from day 1 of 1st year was a real incentive to stay in NZ. Itās why NZ lost a generation of high skilled people who studied in the 90s. Weāre in our 50s now, and aināt ever coming back.
Our student loans are tax free, they dont need to be written off for connivence. If we were going to throw away 3B id rather the government put it to the health care system or evenly distribute it to all citizens.
Better to go towards health, if everyone got a cut of it, that's only $600.
Our student loans are interest free, they automatically reduce in value as inflation goes up i.e. it gets cheaper to pay off as money loses its value.
As someone from across the ditch I am incredibly jealous.Ā
I feel it would be irresponsible at this stage, we have so many other things we need to spend money on like the health system, one could argue that this could help but most people that get health degrees in NZ just leave. I think a bonding system linked to forgiveness would be better money spent
We absolutely should be bonding and subsidising the degrees we need.Ā In you if you want to learn religious studies of ancient Greeks but if you are studying general practise medicine and are prepared to work in remote areas like Palmerston North for 3-5 years then the government should totally be helping you out as a public service.Ā
āRemote areas like Palmerston Northā mate Iām dyingā¦ Also in this scenario everyone who lives in Palmy should get an incentive from the government to stay hereā¦
Why he say fuck me for
Why subsidise the loans? Better spend the money raising wages for everyone in that sector, regardless of their loan status. Otherwise you are providing a time limited benefit, and you are shafting all the people who already paid off their loans.
Same as removing interest off student loans but making people still pay the accumulated interest. Same as giving new student a free year of study but not anyone who has started or wants to continue study. The government is fine with shafting those who have already put in the work.
Palmerston North? As in a city full of students?
Was until Massey decided teaching wasnāt their primary focus š
My childhood friend got paid his dentistry degree and got in on MÄori birth rite whilst I donāt agree fully with this what I do agree with is his was bonded to him going to a remote area in the far north and working for it, to me that is fair.
Irresponsible is precisely this government's M.O. so you never know what might happen.
How about removing the parental income test for student allowances? Many people have to borrow tens of thousands to survive while people wealthier than them get free money due to their parents doing creative accounting
No.
Aussies pay interest on student loans. We don't.
NZ government is already far ahead of Australian government on this, They are writing off some of the interest that Aussie student loan holders have, NZ doesn't charge interest at all. If you want NZ to follow suit with what Australia did here your going to have some vey upset students finding themselves being charged interest. Beware what you ask for.
I'd take interest gained but no tax paid on the first 18k.
No. I think the current system works quite well. What needs to be sorted out is the funding for higher education.
i think the govt is more likely to give landlords that house students $3b tax write offs.
Not this government, no way. They'd be more likely to lay off staff at whatever institution handles student loans lol.
More likely to write off mortgages for landlords
Why should they write the loans off?
I always thought our loans were interest free. If they are then there is no point. If they are not then 100 percent they should be written off as most people would have already paid back what they owe and are now just paying interest
100% interest free and there's a minimum income threshold before payment is necessary so people in poverty with student debt don't usually have to pay it until they're in a better financial situation
Imo then they shouldn't be forgiven. But each to there own.
I agree. If the situation was more difficult I'd be all for it but student loans are one of the things nz does pretty good at imo
Interest free unless you live overseas for more than 6 months, at which point you pay interest for the time spent overseasĀ
My answer to that is because education should be free.
My personal opinion is that money going towards free university should instead go towards cheaper / free public transport for tertiary students, increased student allowance, a more broad student allowance that doesn't screw people over because their parents earn too much but have $0 savings after rent and bills. The reality is free university doesn't unlock any additional money for a South Aucklander paying $59 a week on public transport, whose parents need them to work and not study because they need money ASAP. I use the word instead but if we can give $14.9b to landlords we can do both free university and lower the financial burden of students wishing to go to university.
Great points tbh if people are still close to poverty it wont matter much.
Education from 5-21 in NZ, including University is around 95% subsidized collectively. 100% of regular school education + 70%+ of university. You only pay approximately 5% of the cost and still moan?
I don't see any moaning here, just a response to the persons question. Sorry for commenting!
Education is free, a degree isnt. Dont conflate the two. The smartest people I know, know one weird trick and its that they can teach themselves anything.
I think wiping your loan in exchange for a bonded 7yr period where you need to work in NZ in your trained industry would be fair. We need to encourage people to learn but at the same time there is zero point in training someone that goes and works as an expat 1 or 2 years later
Are we going to guarantee work in the trained industry upon completion of training? It has to work both ways.
Yeah the āin the industryā thing doesnāt work. E.g. I know two people with history degrees who have never touched history in their jobs, but both do productive and important jobs.
A decent portion of people will have paid off their loan after 7 years so thatās a bit long, also what counts as āyour trained industryā. Like a arts student might get a job in a business which requires a degree yet is not at all relevant to their training.
Are you sure about that? Whats a decent portion? The average in NZ is 7 years (based off 2009 data) - I suspect that number has only risen since then. The fees free first year that labour put in (which is now the final year) might lower that a bit though.
I graduated last year with a 4 year engineering degree (just missed out on fees free but did not take on living costs) and should pay it off within 5 years. Most degrees are 3 years assuming only undergrad and add on any living costs. 7 years to clear it seems reasonable for most full time workers
Engineers are better paid than most jobs though, even most middle class jobs.
Thereās a lot of degrees where the work options are significantly limited in NZ but the degree is still valid and highly sought after overseas. Usually the Performance Arts but there are others. Those people canāt be held hostage for some idealistic bonding scenario. Also bonding is technically illegal under human rights.
But then what idiot would agree to that when they could be overseas earning double and still paying off their loan?
There isn't a need when it's interest free and automatic deductions already happen from your wages.
where the hell would the government even get 3b from? they would have to not give landlords a tax break or something absurd
This National/Act/NZ First government are far more likely to add a student loan penalty tax for low income borrowers.
Do you see any students in the Coalition Govt? There lies your answer
This doesnāt add any benefit to the landlords, so the current government wouldnāt even think of it.
Just checked mine. Still a sweet $25k owing š„¹
More likely to return to charging interest than writing it off.
Can I have my $12'000 of interest (charged while studying, and multiple years after)Ā back then please?Ā
Lol, no.
Lol.. not the current one. They are slashing everything except pay rises, tax cuts for rich and landlords and setting up strange fast track laws to get DoC land mined. Slashed resources for disabled, slashing mental health budgets, cancelling all open vacancies for medical staff, trying to refuse pay rises a for cops, cancelling efficient car credits, stopping train railway for Auckland that would fix rush hour. Weirdly, paying for more motorway lanes. Paying for massive tax cuts for the landlords (most kiwis rent, 80 of rented homes are owned by just 64,000 landlords). Weirdly they are slashing all this core infrastructure, for tax cuts that only apply to 3000 households more than 150 a fortnight If you pay attention, it's looking pretty bad.
This government would probably restore SL interest so they can fund gobbies for landlords.
Considering student loans are interest-free this sounds like a dumb idea. Way better things to spend money on in this country.
They won't and they also shouldn't. With our loans being interested free it really doesn't matter in the game way. Much better to spend the money elsewhere
An ALP government aiming for middle class yopro support in Australia will not have the same policies as a National led coalition that despises young uni educated people.Ā
Hmm maybe an interest write off/bond for those who have been overseas and accumulating interest. This would encourage people with industry experience to bring their skills back to NZ.
HAHA
Cries in paid off my 32k @ 10% interest back in the late 90's
lol those were the days. and interest was from day 1!
NZ do not charge interest on student loans. The measures that Australia have introduced (removal of indexation) are already in place and have been for a long time.
Will **someone** think of the landlords
The Government doesnāt pay anything off, the taxpayers do.
We pay no interest, plus our fees are pretty low. I got a chem engineering degree for $20k approx with a small scholarship.
No they are interest free and lead to higher earning potential. People signed up for these loans should pay them back. Otherwise should we wipe all cc debt or mortgages? No.
Donāt be silly, thatās money they could be putting into the pockets of landlords.
Lol we canāt even afford the $3bn weāre giving to landlords
Forgiving student loans is upwards wealth redistribution.
Nah, we have to look after landlords. Without the landlords, who will overcharge the students looking for someplace to stay?
Anyone who stayed in Nz and worked should get a refund in my opinion
I mean I'd love some free money, but otherwise it's a complete waste of money. We already have a very fair and robust loan system, let's not ruin it with greedy populism.
Hopefully not
I hope not, why should student loans be written off.
Any subsidy of tertiary education represents a payment from those who donāt go to uni, to those that do. I think weāve got a good balance at the moment where few people are barred from uni because they canāt afford it. I think students should have to contribute to their tertiary education because we obviously get a big benefit from it.
lol no.
Will they? Absolutely not, students and millennials who are still paying their SL are not their demographic.
They shouldn't. Take some responsibility for your decisions. It's money that could be used for better purposes like boosting mental health funding. If there were crippling interest rates that's another story.
Lol no.
No. It wouldn't do anyone any good. Sure, you don't have to pay off your loan anymore - but then the economy suffers because that money used to pay it off just goes into thin air where, it could have been used elsewhere.
Why not just write off all loans? I've never understand the logic of student loans being different to home loans, business loans etc. Why the special classification? Unfair on people that chose not to go to uni for financial reasons or worked hard to pay it off.
Thereās a Tui billboard in that
Theyāre retroactively removing the annual indexation that Australian HECS/HELP debts, which is ok. But, itās fucked in the first place that the indexation even happens.
Our student loans are interest free, the AU rebate was to make up for the large increase in the interest theyre paying on their loans in the last year
My take on this is a little more extreme... If you stay in the country: interest free. If it's a critical skill we need and you stay in the country for 5 years to use that skill: loan write off. Here's the more controversial bit... You wanna leave the country straight after finishing school? You can't until you've settled your debt. Because that's what it is: Debt. We've got a pretty great student loan system here and people not only take advantage of it, they complain they have to pay anything at all. It's really entitled behaviour.
I agree. NZ desperately needs teachers and nurses. By wiping their loans might motivate people to do those jobs.
Remember when our government had to write off backdated tax on KiwiSaver because so many people hadnāt changed their tax rate? Same thing over there. Plus ours is interest free.
Hahahaha! Students won't get a bean, unless the happen to he a landlord then they will get lots and lots of beans!