For those who have not been following the saga. John Key appoints Steven Joyce as Tertiary Minister because there are ‘economic’ issues to deal with in the portfolio including on student loans. Key denies they are making any major changes, but then uses the PMs statement to Parliament to say that they are looking at tightening eligibility to student support, seemingly with time limits and linking to passing courses.
Steven Joyce repeats this in the Press this morning, and makes it clear that National has no real commitment to the interest free student loans policy, saying it was a “political call” to keep it.
But what really gets me about Joyce’s comments is his perpetuating of the myth that interest free student loans mean there is no incentive to pay back the loan.
“The simple point is, if you don’t pay interest on any loan – forget student loans for a second – then there is less incentive to pay it back than if you do pay interest.”
This totally ignores the point that the student loan, unlike any normal loan, is automatically paid back at 10c in the dollar once you earn more than the annually adjusted threshold, currently $19,084. Its not a question of an incentive to pay the loans back as that the law mandates that you do that, essentially as soon as you start working. If we are going to have a loan scheme, that seems to me to be a fair way of paying it back. I suspect Joyce is in fact concerned about the cost to the Crown of the scheme. If so, let’s talk about that, rather than perpetuating myths about how the scheme operates.












