Interest on Student Loans

The ODT reports:

The Government needs to consider adding “a little bit of interest” to student loans to ensure it has enough money to better fund universities, University of Otago vice-chancellor Sir David Skegg says.

And he is right. Of course it won’t happen, as National promised not to reverse the policy, but logically interest should be charged at least at the rate of inflation – maintaining the value of the loan in real terms.

Prof Skegg said the “massive cost” of student loans meant little money was available for other forms of tertiary funding.

Yep – that’s it for this generation. The bribe was so huge it chewed up all the disposable money. Without it, one would have a decent chance at abolishing parental means testing but that is off the table for at least a decade also.

The university council yesterday adopted a string of fee and levy increases for most students next year, and introduced a capital development levy of $50 to help fund improvements to student social facilities such as the University Union building.

Otago University Students Association (OUSA) president Edwin Darlow “somewhat reluctantly” supported the increases, which will add $190 to $600 to most Dunedin students’ bills next year.

The other student representative on the council, Simon Wilson, opposed the increases, saying they would lead to students increasing their loans.

The capital development levy was “essentially just an additional charge on students” because the university was unable to increase tuition fees beyond the level allowed by legislation, he said.

Prof Skegg agreed.

The problem is the silly fees maxima policy. The Government is controlling both the amount of funding from the Government, and the amount a university can charge in tuition fees. Of course it will end in tears – or with universities finding a way around it. It was one of the stupider policies of Labour and should not be continued by National.

National promised not to charge interest on student loans, and that promise should be respected. But it promise on the fees maxima was simply “Retain restrictions on the amount by which institutions are able to annually increase fees for publicly funded courses” which allows the Government to increase the amount institutions can charge, while still having some restrictions.