Stop charging interest on overseas-based student loan borrowers
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Huge consequences of student loan debts
According to stuff.co.nz, more than $11 billion is owed to the student loans scheme - and an expert is warning the debt is having huge consequences.
Student loan debt grew by more than $3 billion in the past five years to $11,688,600,000 as of June 30 2015, according to Inland Revenue figures released under the Official Information Act.
University of Auckland sociology professor Alan France said student debt was causing several knock-on financial and social effects.
"We used to talk about adulthood coming to fruition between 18 and 21 but now it's more between 25 and 35," he said.
"There's lots of long term evidence that shows you will earn more money if you go to university than if you don't, but these days that pay-off takes five to 10 years.
"Most people now go into low-skilled, low-paid jobs which are insecure when they leave university, so they wind up fighting large student debts on low incomes from jobs which don't have a great deal of long-term future prospects."
"Parents from wealthy backgrounds are able to help kids in all sorts of ways; letting them live at home for free, helping them with a mortgage, different types of subsidised living, buying them cars and so on.
"Alongside that, there's a strong social network in the middle classes of New Zealand so they'll likely know people who can get their kids internships, jobs and other opportunities.
"Kids with parents who can't support them financially come out with bigger debt, work longer hours and borrow money from other sources where they can...
"At 30 [years old], there's still massive social inequality among people who have gone to university."
Regardless of background, buying houses and having families were increasingly difficult for young people, he said.
Wairarapa Free Budget Advisory Service manager Grant Howard said student loan debt was a burden for many people.
"Some young people have got more on their student loans than what they would on a mortgage, which is crazy," he said.
Hastings Budget Advisory Service co-ordinator Kristal Leach said even one-year courses could accrue large debts.
"Often when you think of student loans, you think of people doing a three year-long tertiary degree but we often see people that have done a short course like a one-year diploma, that still have a fair amount of debt," she said.
"We mostly see the younger generation. If they're working, some of it is paid through their taxes, but if they haven't found employment, it can be really hard.
"Long-term the debt can affect their ability to move forward in life with things like getting a mortgage for their first family home and sometimes committing suicide ."
I personally moved to the UK in order get work experience overseas like most people do. My plan was clear: Get a job in my field and start paying off my student loan then return to NZ to live my life.
However, our government do not want us to experience the freedom of traveling, instead they start charging high interest rates on our student loans.
In my opinion, if NZ government can help refugees with a budget of millions annually, they should also consider writing off/lowering interest on overseas-based student loan borrowers.
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