Tuesday, August 02, 2005

Student Loan Fun

The New Zealand Labour party, while desperately trying to drag themselves out of the quicksand they have made for themselves have come out with an absolute shocker: Remove all interest on student loans. Firstly, I don't believe they will go through with it for the simple reason that they've been getting hammered in the polls and they know that New Zealands right has finally found some teeth. It seems like blatant electioneering and they are deliberately trying to grab votes from students, who are under a considerable burden from their student debt. The desperate go and try to appeal to the equally (in some cases) desperate. I myself have a loan and I'm going to have to think about paying it off when I enter the 'real world', but I'm not likely to be bought by such cheap promises when they can so easily recant on their promise.

The second, and strongest point I feel against believing this absurd promise is that labour can very easily 'run the maths' so to speak and recant on what they are offering or simply compromise. National estimate that this policy is going to cost the government up to $300 million more, but Westpac trust (a bank) have done their own numbers and they think the number could be as high as $700 million. If this is the case, Labour could very well realise (assuming they win the election) that the interest write off is utterly untenable and compromise. I wouldn't be surprised with a scheme more along the new one that National is proposing making the interest on the loan tax deductible, which would decrease the total loan repayment by around 25%.

Quite frankly, you'd have to be amazingly gullible to think that Labour will firstly do as they are promised or even if they do actually find a way to pay for it.