Call for loan exemptions

Press, 17 May 1989, Page 5

Call for loan exemptions

PA Wellington A working party report on the Government’s students loan scheme says some students should be exempted because the payments would be a disincentive to seek tertiary study.

The confidential working party report was prepared for the Associate Minister of Education, Mr Goff. It warns that the student loan scheme could discourage women, Maoris, post-graduate students and younger students from tertiary education.

Included in this group are those aged 16 and 17, post-graduate students and adults undertaking community courses at secondary schools. The report recommends tertiary institutions be funded to provide bursaries to post-graduate students because of the importance to the economy of continued high level research. It also recommends students on foundation and bridging courses be exempt from funding, because these courses are aimed at disadvantaged students.

The report said the Government should provide additional assistance to cover course costs of students traditionally under-represented in tertiary institutions. Middle-aged students were also likely to be disadvantaged by the scheme because they would have a reduced working life in which to benefit from tertiary training.

The report recommends that any outstanding debt should be wavered at the age of 60. It also expressed concern that the scheme would discourage parttime and extramural students. However, it did not recommend any exemption for them. Any exemptions to the scheme would make it less efficient and result in less money going into the system, the report said. The University Students’ Association president, Mr Andrew Little, said concerns identified by the report made the scheme unworkable. Mr Little said such exemptions would lead to “all sorts of complexities” in administrating the scheme.

“That’s going to make it less attractive to any financial institution who might be approached to run it and it’s also going to make it more expensive if the Government runs their own administration for the scheme,” he said.

The cost of this would have to be passed on to other students through higher fees or through interest rates.

The Government either had to make concessions to groups listed and charge a variety of different fees, or run a con-

sistent scheme across the board, he said.

“They are going to have to assess very carefully whether they can go ahead with the scheme, afford to go ahead with the scheme both financially and politically and there’s a very clear message, it seems to me in the report, that perhaps the original idea was illthought and perhaps shouldn’t proceed.” The working party report has recommended that the Cabinet social equity committee note that student loan schemes have been introduced in other countries but not without disincentive effects. It also cites the complex trade-offs between efficiency and equity in the proposal.

The disincentive effect of the increased student contribution would be greater for a 16 to 17-year-old than an 18 to 19-year-old. Consequently the report recommends 16 and 17-year-olds be exempted.

The report says financial institutions are concerned about the coverage of the Government guarantee of loans, the right of the institution to select clients and when responsibility for defaulters transfers to the State.