Student loan system plundered like Scandinavian township in Viking times

The 2011 Budget announcement has slashed student loan and allowance entitlements, as the government tightens the collective belt in an effort to get New Zealand to stop bleeding money like a drunk in Vegas.
As expected, borrowing for over 55s is to be restricted to course fees only, and borrowing entitlements will be suspended for students who owe over $500 in repayment obligations for longer than a year.

Other major changes include a shortening of the repayment holiday for overseas graduates from three years to one year, and a freezing of the student loan repayment threshold at the current level of $19,084 until 2015.

The Big Brother government also introduced a requirement that borrowers heading overseas will have to list a contact person resident in New Zealand. This is sure to lead to greater efficiency in the system, as a random relation/friend of the borrower can now be mercilessly subjected to email, phone and snail mail harassment when the IRD realises that the borrower’s “OE” has turned into a permanent move to Equatorial Guinea.

The announcements were predictably slammed by both the left and the right, the former mostly whining about ageism, and the latter bitching about no-one having the balls to whack interest on the loan balances and make those students feel the full force of personal responsibility and the market system.

In a press release, the Green Party slammed the government’s changes. “Part timers, students over 55 and those who’ve previously defaulted on student loan repayments are the big losers in this budget,” MP Gareth Hughes said.

“Students are bearing the costs of the National-ACT government’s fiscal mismanagement and it’s unfair that those who can least afford it are bearing the burden.”

Of more interest than boring political stuff, however, was the revelation that the top 50 student loan scheme borrowers collectively owe over $11million. Quite how one racks up a quarter of a million in loans is not clear, but it probably involves some fleeing of the country and some very sexy compound interest.

Critic’s rudimentary calculations show that the average top 50 borrower could have bought 203,000 cans of Southern Gold at 2011 prices instead of getting an education. With an average night on the SoGos being about a tray, this is enough for 23 years of continuous drinking. Now that is a sobering fact.

Posted 7:53am Thursday 26th May 2011 by Gregor Whyte.