vugvivnc

Given that you don’t pay interest and your loan is written off when you die, the only reason I can see not to take out a student loan is if you think a future government will reverse the policy. I personally don’t think this will happen as there would be a huge backlash from students.

Another problem related to the brain drain is that even though by leaving the country you are forced to pay interest, quite often the difference in wages more than compensates that.

No matter how much economics you introduce into the debate, the vast bulk of students I’d say actually avoid getting excessive loans. I know of many people who in their first year of university study borrowed for living costs, then after seeing the huge amount of money they’d borrowed after the first year, started working part time and reduced their loan to just paying for fees.

Personally, I have been soley borrowed for paying for my courses. The amount of hoops I’ve had to go through for that alone has been such a pain in the arse I’ve hardly even given any thought to borrowing for course costs. And the idea of borrowing for living costs is simply lazy in my mind (I have worked for a couple of days a week, sometimes as much as 30 hours a week, whilst studying), as well as grossly wasteful in terms of how much it adds to the student loan.

What frustrates me is that is that there is no serious discussion around being more generous to students with fees and less generous with living costs – I for one can’t afford to pay for my own fees, which often go up by 5% each year in cost, yet I don’t borrow anywhere near the ‘maximum’ I can.

Jim Anderton is probably the only Parliamentarian who understands the way we are grossly wasting human capital by driving Kiwis overseas with student loans – and why John Key, if he really is serious about bringing New Zealanders home, needs to start progressively softening the entire student loan scheme.

Even if the loans were indexed to inflation there’s a disincentive to repay, as indexing the loan to inflation merely increases the real interest rate to zero. Who’s going to voluntarily pay back a zero real interest loan?

“I completely agree and this is why economists think that interest free student loans are a bad idea.”

It’d be more accurate to say “that’s ONE OF THE REASONS why economists think they’re a bad idea”.