Stuff report Jessica Long Apr 15 2019

If you are unemployed, living in New Zealand and quit studying a certificate-level tertiary qualification you are less likely to pay off your student loan.

Figures released this month showed 8280 people made little or no repayments to student loans in the decade after they finished or pulled-out of tertiary studies in 2006, which put the Government into about $115 million worth of debt. 

In the 2017/18 tax year that amount had decreased by about $17.7m, but borrowers not repaying their loans made up 17 per cent of the total $2.7 billion owed in student repayments, as of June 2018.

A report, commissioned by the Ministry of Education, aimed at identifying the characteristics of a “persistent non-repayer” – someone who made no repayments for three or more consecutive years – said understanding why  they weren’t paying back debt was important for monitoring the impact of Government policies.

“This high proportion of non-repayers, particularly following the introduction of interest-free loans, has contributed to the increased Government subsidy in the Student Loan Scheme,” the report said.

The authors said it was “very likely” these people were not able to make repayments because the leavers’ income fell under the repayment threshold. It added that the number of persistent non-repayers was expected to reduce as new policies were introduced to tighten student loan eligibility. However, Tertiary Education Union president Michael Gilchrist said further evaluations were needed to properly identify why those patterns emerged.

The report was consistent with the issues tertiary sectors faced, outlined in the Government’s reform of vocational education. 

Yet, “tightening eligibility criteria is not responding to the underlying problem of these results”. On the contrary, more investment was needed to support students and better connect institutions like polytechnics with communities.

Almost 70 per cent of non-repayers did not complete their qualification – more than double the proportion of those who completed their qualification, which Gilchrist said was a result of poor policy settings that “have consistently underestimated the time and investment these learners require and deserve”. Students needed a system that was built on inclusion, he said.

Data found trends in certain demographics which mostly included women, was skewed toward people of Māori, Pacific and Asian descent, people over the age of 25 and students who were on a benefit or pension prior to study.

People who studied at  lower qualification levels were most affected, the only exception was at postgraduate degree levels.