Went to university? Paid for it with a student loan? The government is about to welch on your contract, with no negotiation or consultation, and in a way which could significantly financially disadvantage you.
The idea behind the student loan scheme, falsified every day on this blog, is that education is a private benefit. If you go to university, you will supposedly earn a higher salary. The loan contract reflects this by not requiring any repayments until your income is above a certain threshold. In practice, that threshold has been set so low to make the idea of a education as a private benefit laughable - it has always been below the minimum wage. But the general idea seems valid. And if you really got no real economic benefit from your university education, and work part-time or irregularly and don't meet the threshold, then you don't - and shouldn't - have to repay a cent.
The government's new Student Loan Scheme Bill changes that. The bill moves repayments from an annual system to a pay-period one, meaning that deductions will more closely reflect repayment obligations, and borrowers won't be stuck with the icky problem of never quite knowing when they've repaid their loan. This is a generally good idea, but a side effect is that people who work part-time or irregularly and earn less than the annual repayment threshold - people who are at the bottom of the heap and need every dollar they can get - will be forced to make repayments in violation of their contract. And rather than refunding people at the end of the year, the government will just keep the money.
This problem could have been easily removed by continuing the current practice of allowing borrowers to indicate that they did not expect to meet the repayment threshold (something they allow in the case of students). The government chose not to do that, and change a significant term of 530,000 student loan contracts. Coming from a right-wing government which has put compliance with fundamental common law principles (which includes the keeping of contracts) at the heart of its regulatory programme, its a bit odd. But the victims are poor and powerless - and therefore in National's eyes, clearly in need of a good kicking.
The take-home message for student loan borrowers is that the government's word is valueless, and that they will violate your contract whenever they feel like it, for no apparent purpose other than sadism (the change adds very little to expected annual repayments). But its not just student loan borrowers who are affected. The same message is being sent to everyone who has ever signed, or is thinking of signing a contract with the New Zealand government: Wellington's word is not its bond. They are welchers. And that's not exactly a good image for the government to be presenting.
