OPSA Media Release

No Interest - or No Builders

Treasury papers released by Michael Cullen yesterday emphasises that no interest on student loans is vital. With student and graduate debt reaching $8 billion dollars yesterday the proposed interest wipe off will have positive outcomes for all New Zealanders.

Labour has been criticised for ignoring Treasury’s costing of this policy and creating their own. However, Treasury’s costing is based on a demonstrably flawed model:

Since 2000 students have paid no interest while studying. The huge increase in student loans Treasury predicted simply has not happen. Treasury have used similar flawed projections of increases for the costing of Labour’s latest interest free policy.

“While Treasury’s projections are completely over the top, the reality is that the country desperately needs more skilled workers.” said OPSA President, Rachel Dibble.

“Certainly if Labour’s interest free policy is implemented there will probably be small increases in student numbers. Even if these were in the absurd magnitude Treasury projects, this can only be a good thing since New Zealand suffers a skill shortage that can only be solved by improving access to courses.” said Ms Dibble.

“Has anyone tried to get a builder or plumber lately? Trades people are desperately sought after but face a huge student debt if they consider studying. If we don’t stem this debt, the brain drain will mean NZ will soon be short of many other graduates like nurses, lab technicians, and quality IT professionals” said Ms Dibble.

OPSA Media Release

Thank you very much for your high student debt…

Student Debt hits $8 Billion


Student debt today hit $8 billion dollars. OPSA will be issuing its own ‘money’ tomorrow – “redeemable Sept 17” to observe the occasion.

“This debt will have an outrageous effect on the country. There will be a flow on cost to services supplied by graduates, and drive the cost of living higher. The current brain drain overseas will worsen” said OPSA President, Rachel Dibble.

The $8 billion debt milestone comes just one week after a Colmar Brunton poll was released showing that 74% of New Zealanders believe more students should receive a student allowance; Three weeks previously, a similar Colmar Brunton poll found that 76% of New Zealanders think the student loan interest rate is too high.

There are 3 key drivers of debt:- Fees, Allowances (or rather lack of), and Interest. None of the major parties have policy that will decrease this debt.

“Indeed fees are still rising as we go to the polls - Under National fees increased 12% per annum; under Labour this has slowed dramatically – but they are still increasing. – we need fees to be decreasing…” said Rachel Dibble.

The best offer from the two main parties is the welcome wiping of interest:

The interest component of loans means a lower income worker (eg a nurse) can end up paying more for their education than a high income worker who can pay off their debt more quickly (eg a doctor). In reality, many current graduates will die before they have paid their debt off.

“OPSA welcomes the proposed dropping of interest, and encourages voters to elect a government who will meet the country’s education needs…” said Rachel Dibble.