student loan idea (not mine)

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Forums › Finance and wealth management › student loan idea (not mine)

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1377 posts

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#456147 6-Apr-2011 22:26

I think the student loan scheme is great, but it's people who do this sort of thing that spoil it for everyone. It's not free money tax payers are paying for it and this jus tputs the government into even more unnecessary debt.

Another example of this is people whos parents pay their uni fees but take the loan out anyway then when the finish uni they pay back the loan and keep all the interest - i mean seriously you have already been given a fantastic head start by having no uni fees - taking more from the system is down disgusting.

Any person with half a brain(which i would hope they have if they are at uni) would realise that a small personal gain is costing the country thousands if not millions of dollars a year.

robbyp

1199 posts

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#456155 6-Apr-2011 22:34

Don't you have to pay a fee to set up a student loan, so any money you make on interest maybe pretty minimal. You also have to pay tax on the interest, and as interest rates are at such low levels you aren't making much.

amford

92 posts

Master Geek

#456161 6-Apr-2011 22:42

They should scrap the interest free and make allowances available to everyone.

Also they should offer incentives in areas of which there are national shortages i.e. doctors get 5k off there loan if they do 2 years as a GP in a rural township.

Surely what they would contribute to the community would more than make up for the initial cost.

The same would go both ways. if there was an oversupply of a certain profession then there should be less places available throughout the country.

Lets say there were to many accountants (example only) then by restricting the number of accounting students in the country you would produce a higher standard of accountants and offer them more chance of finding a job as they graduate.

Just and idea but we need to offer incentives for young professionals to stay and work in New Zealand rather than buggering off overseas.

asmcar

331 posts

Ultimate Geek

#456167 6-Apr-2011 22:50

amford: They should scrap the interest free and make allowances available to everyone.

I'm a current student and would have to agree doing something like this is ruining the system for everybody else. There is NO such thing in life as "free money", someone is paying for it. If you don't need the money don't take it.

I believe there should be universal loans for everyone, not universal allowances. Make it even for everybody by only loaning the money. Allowances are just giving money away, If a student is going to a tertiary institution then once they graduate their job should allow them to pay the loans back.

I currently get $169 a week from the government on a living allowance loan. Other friends of mine get $200 a week, allowance because their parents don't earn enough. If everyone was to get $200 a week on a loan for instance why would allowances still be needed?

I may be viewing this quite simplistically and chances are I missed a point which makes my idea redundant but just my views.

Cheers

networkn

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#456170 6-Apr-2011 23:04

My God this is why students shouldn't be allowed to vote. Not only are you getting a cheap education, you are getting it interest free, but instead of being grateful, you are manipulating the system. Holy Christ, you do realize that the REST OF US PAY YOUR INTEREST!? IE It's not free money for everyone, the GOVT and by extension every working person in NZ pays that interest on your behalf. Your friend needs to be read the riot act. Let me know who he is, so that if he applies for a job with me if s/he graduates I can steer clear!

Unbelievable. Interest free loans shouldn't exist in the first place, it was a bribe that got Labour into power, and everyone knows how much people value things that they get for free.

Tell your friend to get off their backside and get a job if he wants money so badly.

b0untypure1

1426 posts

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#456172 6-Apr-2011 23:18

networkn: My God this is why students shouldn't be allowed to vote. Not only are you getting a cheap education, you are getting it interest free, but instead of being grateful, you are manipulating the system. Holy Christ, you do realize that the REST OF US PAY YOUR INTEREST!? IE It's not free money for everyone, the GOVT and by extension every working person in NZ pays that interest on your behalf. Your friend needs to be read the riot act. Let me know who he is, so that if he applies for a job with me if s/he graduates I can steer clear!

Unbelievable. Interest free loans shouldn't exist in the first place, it was a bribe that got Labour into power, and everyone knows how much people value things that they get for free.

Tell your friend to get off their backside and get a job if he wants money so badly.

+1 !

thanks everyone for your replies, it has been very helpful for myself to see both sides of the debate. ill show my friend tomorrow (this thread)
any other addition information is appreciated - i enjoy debates of this nature. personally i believe whatever job i get after uni, should allow myself to pay back my loan no probs. instead of trying to rip off the system - like many others, i am also a taxpayer and dont believe i should be working and paying tax towards my friend (or others) gaining free money and having an interest free loan.

(slightly off topic) but i support interest being charged on loans. it could help get NZ out of debt :P

robbyp

1199 posts

Uber Geek

#456173 6-Apr-2011 23:23

networkn: My God this is why students shouldn't be allowed to vote. Not only are you getting a cheap education, you are getting it interest free, but instead of being grateful, you are manipulating the system. Holy Christ, you do realize that the REST OF US PAY YOUR INTEREST!? IE It's not free money for everyone, the GOVT and by extension every working person in NZ pays that interest on your behalf. Your friend needs to be read the riot act. Let me know who he is, so that if he applies for a job with me if s/he graduates I can steer clear!

Unbelievable. Interest free loans shouldn't exist in the first place, it was a bribe that got Labour into power, and everyone knows how much people value things that they get for free.

Tell your friend to get off their backside and get a job if he wants money so badly.

I agree, and I am sure many students also see the flaw in the current system, but not sure how many are taking advatage of it. When I was at uni, you had to pay interest while studying. Then the interest free period was extended if you stayed in NZ. Those were all election bribes to get the student vote. None of that has worked in stopping people heading offshore.

I think the interest free period should only apply while you are studying, as that is a period when you are not earning. It certainly shouldn't apply when you are out working.

If we want to keep valuable skilled people in NZ, such as doctors, we need a bonding system, where they are contracted to stay in NZ and their loan will be paid off for them the longer they stay. Say it gets paid off in total if they stay for 15 years. By that time they will probably have a family and won't want to move anyway. I beleive they do something like this in the Navy where you are bonded to them.

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networkn

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#456178 6-Apr-2011 23:43

b0untypure1:
networkn: My God this is why students shouldn't be allowed to vote. Not only are you getting a cheap education, you are getting it interest free, but instead of being grateful, you are manipulating the system. Holy Christ, you do realize that the REST OF US PAY YOUR INTEREST!? IE It's not free money for everyone, the GOVT and by extension every working person in NZ pays that interest on your behalf. Your friend needs to be read the riot act. Let me know who he is, so that if he applies for a job with me if s/he graduates I can steer clear!

Unbelievable. Interest free loans shouldn't exist in the first place, it was a bribe that got Labour into power, and everyone knows how much people value things that they get for free.

Tell your friend to get off their backside and get a job if he wants money so badly.

+1 !

thanks everyone for your replies, it has been very helpful for myself to see both sides of the debate. ill show my friend tomorrow (this thread)
any other addition information is appreciated - i enjoy debates of this nature. personally i believe whatever job i get after uni, should allow myself to pay back my loan no probs. instead of trying to rip off the system - like many others, i am also a taxpayer and dont believe i should be working and paying tax towards my friend (or others) gaining free money and having an interest free loan.

(slightly off topic) but i support interest being charged on loans. it could help get NZ out of debt :P

I am really impressed you considered both sides of this scenario, I believe you are a credit to your parents, and am certain you will do well with employment. best of luck with your studies.

Sadly your friend I feel is probably beyond help :)

mattRSK

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#456207 7-Apr-2011 07:44

I can't see how it is different to somebody using an accountant to pay less tax with their business.

amford

92 posts

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#456211 7-Apr-2011 08:14

mattRSK: I can't see how it is different to somebody using an accountant to pay less tax with their business.

Jaxson

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#456220 7-Apr-2011 08:40

mattRSK: I can't see how it is different to somebody using an accountant to pay less tax with their business.

+1 again.

When I was at Uni only two groups got the student allowance.

1 was those who genuinely deserved it and to be fair there were not many of them. If your family is genuinely very hard up for cash its unfortunately somewhat unlikely that you've made it to tertiary education in the first place, and if you have then you get my vote for some support.

The second group were those who families owned businesses and were able to hide their income. Admittedly some of these students parents had poorly performing businesses. The vast majority though came from businesses or farms where the game was to dump as much money as possible on 'business related expenses'. Therefore the business didn't make much profit and the kids got a student allowance.

My Dad was a teacher and that put us over the limit. Very hard to hide you income if you're paid by the government itself. None of my brothers and sisters got the allowance.

I don't know, just seems BS to me.

networkn

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#456222 7-Apr-2011 08:43

LOL that's not even close to the same thing.

An interest free student loan, provided at the COST to the taxpayer is a privilege and designed to allow you to pay for essential items whilst studying. Taking extra money you don't actually NEED as a money making venture abuses the very nature of the assistance the country offers you to educate yourself to make a living.

networkn

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#456225 7-Apr-2011 08:49

Jaxson.

There are people who abuse the system in every part of the country in every area, it's unfortunate, but the attitude should not be "if they do it, why shouldn't we" as it is bad for the country in the long term. I own a business and whilst my son is only 20 months, we have a plan to put him through university at our cost so long as he makes an effort to support himself at the same time. I know lots of business owners with the same attitude, and a very very small number who are looking to take advantage.

I guess it comes down to moral compass, I personally could take advantage, but it's not in my nature as I feel my children need to live in this country after I am done with it, and want to make sure I leave a reasonable legacy.

Lizard1977

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#456234 7-Apr-2011 09:10

Apologies if someone has already mentioned this, but my understanding was that if you borrow to pay your fees, the fees portion goes straight to the university. You can borrow $1000 for course related costs, and you can borrow living costs, but this is only to a maximum of $150 per week, and it's not paid up front. At least, this is my understanding though it's been 8 years since I was in the system.

If this is still the case, then the maximum you can borrow to invest in one lump sum is $1150, with $150 a week to add in to your investment. If you have the money to pay your fees, and choose instead to take a loan for your fees, and invest your own money, then that would be different, but it's more of substitute than a direct investment of a loan. In my opinion, an investment of $1150 with a top up of $150 a week isn't more attractive than the alternative, which is borrowing that money and using it for such extravagances as rent, food, text books, etc. At least, that's what I did when I studied, supplemented by the minimum-wage income from 20 hours part time work on top of 8-10 hours of study a day, every day...

To be perfectly frank, I think the potential to rort the system is grossly overstated.

wellygary

8312 posts

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#456241 7-Apr-2011 09:22

Lizard1977: Apologies if someone has already mentioned this, but my understanding was that if you borrow to pay your fees, the fees portion goes straight to the university. You can borrow $1000 for course related costs, and you can borrow living costs, but this is only to a maximum of $150 per week, and it's not paid up front. At least, this is my understanding though it's been 8 years since I was in the system.

To be perfectly frank, I think the potential to rort the system is grossly overstated.

Yip there is no "5 Grand lump sum" option in the loans scheme, the fees portion goes direct to the Uni/Polytech and you get books/course costs and $150/week living costs.

Sticking it is the bank @4-5% less tax will give you a return that I would describe as "fairly crap"TM,

I remember when the loans scheme was first introduced, yip you could draw it down all at once and go and blow it on a car/snowboard/what ever but when you noticed the 8% interest rate adding itself to you eventual loan you started to feel majorly bummed out.

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