Wednesday, June 28, 2017



Election issues: Student debt

Student loans have been with us for 25 years, and over that period ex-students have been burdened with billions of dollars of odious debt. Currently almost three-quarters of a million of us are carrying $15 billion of this unjust debt, and billions more have been repaid (at the cost of people delaying homes and families to pay off the government for the privilege of being denied a basic standard of living). The debt is odious in a legal sense because it is effectively coerced and extracted under false pretences. People at the beginning of their lives are told they must incur it to have any chance of a decent job: "get a loan or flip burgers". The reality is that NZ workers are underpaid and overqualified, meaning that the promised reward is a lie. There's also a huge intergenerational justice issue, in that the people extorting these loans benefitted themselves from free tertiary education when they were students.

Now, finally, we're seeing a move to end this. But it doesn't come from Labour (whose senior leadership all protested against student debt when they were at university). Instead, it comes from New Zealand First:

New Zealand First is promising to wipe student loans for new students who stay and work in the country for five years, and it says that it will only cost $4.6b a year.

People who bond themselves to regions in need of workers or study for less time could wipe theirs even faster.

The "Up Front Investment" announcement was made at the party's regional conference this weekend, along with the promise of a universal student allowance, instead of the means tested benefit currently in place.


But there's a catch: they'd impose full fees (not the current subsidised ones) on anyone who left the country. This would increase the size of the debt five- or six-fold (to about the size of a house deposit in Auckland). So, its nowhere near as good as it looks, and unnecessarily punitive. Kiwis overseas already face an excessively punitive regime, and this sort of sudden imposed "debt" is not going to encourage compliance (except possibly in the form of strategic bankruptcy, which really looks like a good idea if the government sticks you with that sort of burden).

Still, this is forcing the issue onto the agenda, and Labour looks uncomfortable on this. As noted above, their senior leadership are all veteran protesters against student debt. But they're opposing NZ First's scheme as "unaffordable" (compared to their half-measures). I guess that's how much a Parliamentary salary changes things.

But NZ First is right: something needs to be done. It is unjust to impose this odious debt on the young. It is unjust to effectively force people to borrow to pay for food. And it is unjust to continue to burden victims of this scheme with a lifetime of debt they will never repay. Political parties need to have policies not just to end student loans, but also to relieve this odious debt. And we should judge them on those policies in September.