2. MOANA MACKEY (Labour) Link to this
to the Minister for Tertiary Education
How many borrowers will save under the interest-free student loan policy coming into effect on 1 April 2006?
Hon Dr MICHAEL CULLEN (Minister for Tertiary Education) Link to this
Around 470,000 New Zealanders will benefit. Around 350,000 will get an immediate benefit from the policy, and around 120,000 people who are already studying interest-free under Labour’s 2000 policy will benefit when they finish studying.
Has the Minister received any reports suggesting alternative approaches to setting interest rates for student loans?
Hon Dr MICHAEL CULLEN Link to this
Over recent years I have received many such reports. One report states: “Interest has to be charged because you are using taxpayer money.” A second states: “Although the total of student debt has risen to over $7 billion, it is small when compared with private sector debt.” A third condemns student loans that will take many people decades to pay off, and a fourth highlights aspects of the previous scheme that are unfair. The first two reports are from Dr Donald Brash, the third is from new National MP Paula Bennett, and the fourth from Dr Lockwood Smith.
Hon Bill EnglishCan the Minister confirm that the Ministry of Social Development will incur additional costs of $3 million to process the extra applications for student loans, and can he advise the House how much the new information technology system that the Inland Revenue Department requires for student loans will cost?
Hon Dr MICHAEL CULLEN Link to this
I can confirm the first figure. I do not have the second figure in front of me, although I think it is fair to say that the Inland Revenue Department was considering its information technology systems in any case.
Peter BrownIs the Minister aware that some wealthy parents who would normally have paid for their offsprings’ education at university will now, with interest-free loans, advise their children to borrow and put the money in the bank to earn significant interest; if the Minister is aware of that, how will he cope with that sort of scenario?
Hon Dr MICHAEL CULLEN Link to this
There have always been some wealthy parents who fail to meet their parental responsibilities in those respects. All I can say in response to that is that on evidence so far, the number is less than what was forecast to be the case.