Parties vie for votes with loan schemes

November 12, 1999

WELLINGTON

With student debt standing at more than NZ$3 billion (Pounds 937 million), the student loan scheme will be a major issue in New Zealand in this month's general election.

The key parties are promising to review or change aspects of the loan scheme, with most targeting interest rates.

Repayments are linked to post-graduation income, with borrowers currently paying back at a rate of 10 cents in the dollar on salaries of more than NZ$14,716 a year.

Party promises range from a minimal review of the scheme to make it fairer by the right-wing ACT Party - a possible coalition partner with the National Party - to the left Alliance Party saying it would stop all interest payments, abolish the loan scheme after three years and introduce a universal student allowance.

The National government has promised to reduce loan interest rates by up to a quarter during the years of study to reduce the effects on students of compounding interest. It will also raise repayment rates for higher earners to speed up debt repayment.

Labour, which is polling marginally ahead of the National Party and which would make the Alliance its coalition partner after the November election, says it would abolish all loan interest during the years of study and introduce a system to ensure repayments by which low-income earners would pay off principal.

The New Zealand First Party, which looks set to hold the balance of power in a coalition government, is also looking to lower interest rates.

Vice-chancellors have called

for university education to be accessible and affordable, saying universities need more government funding. Their call comes as universities are raising fees to widespread student protests.

The universities are putting the blame for the fee hikes - which are likely to place fees for most courses at around the NZ$3,000-3,800 mark - at the government's door. Its changes to postgraduate funding mean subsidies will drop for taught courses.

Tertiary education policy has been in limbo since April when the government announced it was scrapping much of the tertiary education white paper it released only a few months earlier.

It finally launched a new strategy in October - the "Bright Future" package, which is aimed at developing a so-called "knowledge economy".

In it, the National government promises a taskforce to review the sector, as well as money for 80 new NZ$40,000 doctoral scholarships and more postdoctoral fellowships.

While the sector was weary at the thought of yet another review, vice-chancellors welcomed the dropping of such controversial white paper policies as capital charging and of the NZ$20 million contestable research funding, which would have taken money from science, engineering and technology programmes.

But the relief was shortlived when the education ministry announced that the funding subsidies for next year include changes that will increase money for doctoral degrees and undergraduate degrees at the expense of taught postgraduate courses.

The result will be a net loss in funding for some universities, with the largest, Auckland, understood to be the hardest hit.

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