‘Cracking-down’ on graduates

Yesterday in parliament, a punitive law was passed to ‘crack down’ on overseas student loan borrowers. It increased the repayment responsibilities of graduates living overseas, and means that they can be arrested at the border for not paying back their student loan.

When these changes were first announced in last years’ budget, I received an email from a family living in the United States, who were deeply concerned about the effect this would have on them.

Because of this bill, their minimum annual repayments will go up from $6000 to $9000 a year. At the current exchange rates, that means they will be paying approximately 19 percent of their income towards their student loan debt, with no means testing, no consideration of the fact that only one of them is in paid work, and no consideration that they have two dependents.

This family has a strong intention of returning to New Zealand. They fully intend to repay their loans, and are currently compliant with all their loan obligations. But the new repayments are totally unaffordable for this family, and they can’t see a way to meet them that won’t break their budget. If they default on them, they could now be arrested at the border when they try to come home to New Zealand.

This new law is another in a series from this Government that tinkers around the edges of the fundamentally broken Student Loan Scheme. Their focus has been on trying to wring every last dollar from students and graduates, without looking at the bigger picture of why and how we fund tertiary education.

It is symptomatic of a Government that does not value tertiary education as a public good, sees student support as a political nuisance, and sees student loan scheme amendment bills like this as opportunities to put the screws on graduates and squeeze more and more students out of eligibility for support.

We have the opportunity to design modern, smart, fair tertiary and student support. The Green Party in Government would grasp this opportunity with both hands and invest in our future by investing in students.

16 Comments Posted

  1. Yup… memory is spot on… if they are still doing it the same as they were when I left at least. I got my education that way.

    Problem is that the arrangement can, in this country and with the policies currently in place ie, “buy everything from overseas, as cheap as possible” the “needed graduates” numbers would fairly swiftly go to zero. Governments here claim making milk and beef for export is “manufacturing”.

    The truth may set you free, but first it will make you throw-up.

    This government has broken so much so fast that it seems that they are entirely focused on the work of selling the country out to the highest overseas bidders. Labour was only marginally better back when it was in charge. The problem is New Zealanders themselves.

    They haven’t figured out that their fixation with the “free market” and market uber alles, is killing the country they love so well.

    Can’t fix just one thing. The whole economy is “broken”.

  2. BJ
    This is where the possibility of “needed graduates” comes into play.

    In Sri Lanka a University education is free – but only available to those who have demonstrated their aptitude to study and learn. The universities are given quotas of graduate profiles (so many electrical engineering grads, so many commerce grads, etc.,) and service a set range of degrees. This aline with some (possibly reasonable) thinking about what skills and expertise the country needs, thus focusing investment in education that is believed to have national value. I’ve not heard of anyone failing to graduate once they are accepted, but I would have no problem believing that they are presented with a bill for the taxes they have wasted by dropping out or not putting in the effort they were judged capable of delivering.

    As I remember it, all the USA military wings have University sponsorships, but they are tied to a period of service that reflects a return, is my memory right on this?

  3. what would your alternative be?

    Revoke their passport? Seems to me it would do the trick. Not mattering where they are, they’d be there illegally. Problem is that its going to drive down the wages for skilled labour here, as graduates opt to stick around to kill their debt, and there really isn’t all that much work for those skills due to successive governments misunderstanding of “comparative advantage” and obeisance to the free-market fundamentalists.

  4. David – Never said that they should go live in London… if they do it serves them right 🙂

    Moreover, the desirability of going to work in London vs here had better be changing. We’ve gutted this country’s economy in service of free market fundamentalism QUITE long enough, and it shouldn’t be necessary for a graduate to have to go overseas to get paid.

    You should note that I agree with Dave’s approach to this. The money gets written off while they live and work here in NZ and gets converted if they leave early.

    MY point is that it is absolutely wrong to saddle kids with a massive debt for getting an education.

    Rich or Poor, if they have the ability they should be able to get the education and not have the equivalent of a down payment for a house hanging over their heads before they even start working. We used to be smarter about this but now we give every last person in NZ who attains decent skills some really good reasons to get on the plane.


  5. Just read the amendment and apparently, yes. If you try to travel outside the country multiple times without paying they will put you in prison. Scary stuff. I’ve never wanted a change of government so badly.

  6. Dave – and I agree with you about it not being something that “just anyone” should do. The US Navy used to (may still do) provide a very good University education for free, to those who qualified for it. Worked well for them over the years. I think your scheme has merit. Far more than what we see now at least. I would not be wanting to give everyone Carte Blanche to sponge for their educational dollars. I see some fish hooks but all such arrangements possess them and of those I have heard of, I do like yours well. So I am the first to rec. your post. I see others of smaller mind are visiting us. Too bad they have no idea what they are doing good enough to post a response.


  7. BJ
    In general I could agree, however there needs to be some restraint on who can casually grab a tuition and living “grant” and live off my taxes for a few years.

    Personally, I am in favour of having a scheme whereby loans are interest free during “required” study, and then written off over a period of working in NZ in the field studied. If you don’t graduate, or don’t work in the field studied or don’t work in NZ (or in a position approved by an appropriate NZ professional body) then your “grant” should be turned into an unsecured loan to be paid back at current retail banking rates and periods for similar loans.


  8. More right-wing politics !
    Attack so-called beneficiary cheats & now student loan defaulters.. whilst doing NOTHING about the massive levels of ‘corporate tax avoidance’.
    This is not about maintaining law & order, but about stamping on the ‘little guys’ whilst giving advantage to their rich mates (who vote for them) !!

    kia ora

  9. It is not right that that a graduate can leave the country and thumb their nose at the taxpayers who paid to support them to get a degree.

    Why do you think working class taxpayers of NZ should pay for some rich kid to get a degree and then go live in London earing mega bucks and never pay back the cost of education?

  10. Dave

    The real answer is that IT DOES NOT MATTER. The student should not be saddled with this nonsense “user pays” ideologically motivated handicap.

    It was wrong-headed from the very start.


  11. So for this family, what is the depreciation period of the loan. In other words, if it was a mortgage, his many years would it take to pay off?

  12. Why charge students in the first place? Why not make them sign to say they will work in NZ for five years after earning their degree. This person has shot through to the USA, so anything he or she learned at Uni is wasted in NZ. Let’s have free education but with the proviso that the person who succeeds stays here for a certain length of time and pays back to this nation for the lessons they have received.Too many build up a student loan and then shoot through with no intention of repaying for their tutoring.

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