Student loans face the axe

Press, 7 September 1989, Page 1

Student loans face the axe

Wellington reporters

The student loan scheme is understood to have been axed following the last-minute failure of at least two key trading banks to negotiate a viable package.

The breakdown in talks means that most tertiary students face fees of up to 15 per cent of course costs next year, with no loan scheme to cover the fee rise.

For university students this could mean tuition fees of up to $l5OO a year. Most now pay about $l3O. The Minister of Education, Mr Goff, is scheduled today to formally announce fee levels, and to report on the results of the talks with the trading banks. But sources last evening confirmed that the loan scheme had been canned for 1990.

Key reasons for this were said to be the preference of the banks to make their own private arrangements with students, and the banks’ fear of a student backlash if they participated in the Government scheme.

Tertiary students, especially the New Zealand University Students’ Association, had vowed to target banks which participated in the scheme. The breakdown in talks appears to be the final act in the on-again, off-again loan saga that began in February, when the Government unveiled its loan scheme.

Talks with the Bankers’ Association broke down in late June, forcing the Government to begin negotiations with individual trading banks. It also took the association to the Commerce Commission.

The commission is still considering the Government’s complaint that banks acted in collusion. A commission spokesman said last week that a ruling was due soon.

Mr Goff then outlined an alternative proposal regarding tuition costs. This will probably be confirmed this afternoon when Mr Goff is likely to announce the failure of the loan scheme. Under the alternative proposal, students from low-income families and those taking courses unlikely to lead to a high-paying career, would be exempt from the new fee level.

University students now face nominal fees of about $5OO, although many qualify for a reduced payment of about $l3O.

Under the loan scheme the fee rise would have been higher — up to $2OOO for university students — but the loans, carrying no real interest, would not have required repayment until students were earning at least the average wage. The Government has stated that increased fees are essential to provide more places in tertiary institutions. Confirmation that the controversial scheme had been scrapped followed statements from Opposition members of Parliament that two months of talks had proved fruitless. The Opposition’s education spokesman, Dr Lockwood Smith, said that the breakdown was due primarily to the banks’ concern about getting Government guarantees for defaulting students.

He believed that the up-front tuition fee to be announced today would be about $1250 a year — less than the figure of $l5OO implied by Mr Goff in early July.