Student loan payments

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Forums › Finance and wealth management › Student loan payments

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1490 posts

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#744329 14-Jan-2013 00:18

reven: im all for it, if you borrow the money you should pay it back simple as that. and if you get a 70k student loan, you expect to be in a job that pays well, otherwise its not really worth it.

Once was a time, you went to University to expand your own knowledge, to learn how to conduct research, to learn how to really think about things in new ways, and hopefully one day advance the sum knowledge of humankind.

Now it seems we just go to University to learn what is needed to do a job.

I think that's rather a shame.

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Mark

1653 posts

Uber Geek

#744353 14-Jan-2013 08:39

sleemanj:

Once was a time, you went to University to expand your own knowledge, to learn how to conduct research, to learn how to really think about things in new ways, and hopefully one day advance the sum knowledge of humankind.

Now it seems we just go to University to learn what is needed to do a job.

I think that's rather a shame.

I've not thought of it like that before .. and you are absolutely right, now all a degree is good for is getting your first job, after that it's just a line item on your CV :-(

Byrned

455 posts

Ultimate Geek

#744366 14-Jan-2013 09:17

sleemanj:
reven: im all for it, if you borrow the money you should pay it back simple as that. and if you get a 70k student loan, you expect to be in a job that pays well, otherwise its not really worth it.

Once was a time, you went to University to expand your own knowledge, to learn how to conduct research, to learn how to really think about things in new ways, and hopefully one day advance the sum knowledge of humankind.

Now it seems we just go to University to learn what is needed to do a job.

I think that's rather a shame.

I would agree that this is the case for many people. Sadly it doesn't need to be. Like most things in life it's what you take out of it. i look at degrees as a bit of paper that says "you know how to find out things"... not that you nesacerily now things. By the time you get out of Uni or get into a position where using the degree may be meaningful, what you learnt is often irrelevant.

It also used to be that we had 2 quite different vocational paths for people to go down. One was going to University and the other was "trades" based, becoming an apprentice. Both gave you the option of bettering yourself and earning better money than otherwise was the case of doing nothing.

I think far too often people are going to Uni because "that’s what they're told/encouraged" to do, rather than what is right for them. How many people do you know that went to Uni and then did absolutely nothing with their degree? Thinking of my 10 closest friends, 4 of them do work that would make sue of their degree, and a further 2 went back and retrained in a completely different field.

Jas777

838 posts

Ultimate Geek

#744369 14-Jan-2013 09:25

I get a bit annoyed with people who complain about how bad the student loan scheme is. If you go overseas then you should not get the same rights as those that stay here. Remember that you still only cover 25% of your degree costs.

Where else will you get a loan which you don't have to pay interest on to potentially advance your earning potentail? If I come up with an idea for a business will the government give me a interest free loan to develop it?

In some ways if the loan schem was for more than just doing degrees I think it might work better.

gzt

17104 posts

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Lifetime subscriber

#744449 14-Jan-2013 11:49

Byrned: I really hope this plonker isn't looking for any sympathy. To me he just comes across as someone who wants to justify his actions of ripping of the NZ taxpayer. And for his SL to double to $140k whilst he was in Aus, he can't have been making any repayments to it at all.

As per my earlier post he is making the case that the IRD's requirement for payment of 15K per annum while he was overseas in 2000 was way too high and that's where all the trouble started. I'd like to know if that 15K figure is correct. That would be much higher than any payment requirement had he remained in the country. If this herald 'fact' is incorrect then nearly the whole article is worthless.

Athlonite

1828 posts

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#744453 14-Jan-2013 11:57

yes IT would seem rather funny if 3k is all he had to pay whilst living in Aus but 15k if living here I don't get how they work that out shouldn't you be required to pay the same amount regardless of where you live

And 15k a year is quite a steep repayment he must have been on an really good pay check to be asked to pay back that amount per year

Kyanar

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#744468 14-Jan-2013 12:23

Athlonite: yes IT would seem rather funny if 3k is all he had to pay whilst living in Aus but 15k if living here I don't get how they work that out shouldn't you be required to pay the same amount regardless of where you live

And 15k a year is quite a steep repayment he must have been on an really good pay check to be asked to pay back that amount per year

It is correct.

While in NZ, your repayments are based on a percentage of your gross income with no maximum cap - the more you earn, the more you pay. When you're overseas, the repayments are based on your total loan balance, to a maximum of $3000. See http://www.ird.govt.nz/studentloans/payments/compulsory/overseas/.

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qwerty7

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Inactive user

#744473 14-Jan-2013 12:31

People take out student loans without any real consideration. I have no idea how people can be comfortable having such big debt. I think it is related to attitudes towards money during your upbringing which effects your spending habits etc.

Athlonite

1828 posts

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Inactive user

#744495 14-Jan-2013 13:03

Kyanar:
Athlonite: yes IT would seem rather funny if 3k is all he had to pay whilst living in Aus but 15k if living here I don't get how they work that out shouldn't you be required to pay the same amount regardless of where you live

And 15k a year is quite a steep repayment he must have been on an really good pay check to be asked to pay back that amount per year

It is correct.

While in NZ, your repayments are based on a percentage of your gross income with no maximum cap - the more you earn, the more you pay. When you're overseas, the repayments are based on your total loan balance, to a maximum of $3000. See http://www.ird.govt.nz/studentloans/payments/compulsory/overseas/.

Well isn't that just crap it should be the same no matter where you live ie: based on how much you earn before tax and no limit the more you earn the more you pay back

anything else is just going to lead into trouble, just like CC repayments if you only pay the min then your going to end up in trouble

afe66

3181 posts

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#744593 14-Jan-2013 15:06

I have very little sympathy for the chap in the article.
I was the first generation affected. ie fees were $300 when I was 7th form $1250 in my first year and 5000 by my 4th year, no allowances. 83k by the end.

No accelerated paybacks, no write offs , no payback holidays, no 3k limit if overseas. I went overseas for high salary and knew I had to pay 9k per year regardless of my income.

Those were the terms I signed up for. I borrowed and paid it back.

Screw those who don't pay to the wall...

Rant off

mattwnz

20141 posts

Uber Geek

#744611 14-Jan-2013 15:40

afe66: I have very little sympathy for the chap in the article.
I was the first generation affected. ie fees were $300 when I was 7th form $1250 in my first year and 5000 by my 4th year, no allowances. 83k by the end.
..

Rant off

Not only that, we had to pay back interest while we were studying, and in those days interest rates were high! These days it is totally interest free as long as you remain in NZ. Not really the biggest incentive to stay, if that is why they have it, because people can often earn a whole lot more overseas.

Allowances too are a joke. Many of my classmates parents earnt a lot of money from farming their own property, but it was all structured so on paper they didn't earn much, so the kids qualified for all the student allowances allowances. But my parents who were normal salary earners didn't do this, so I didn't qualify, and they weren't earning big moeny. Also I believe you can only qualify for allowances, and the parents income isn't taken into account, when your age exceeds 24, which is when most people have finished university studies anyway.So you get quite a lot of older students who come in and qualify for allowances. Yet at age 18, even though on paper you are an independent adult, your parents income is still taken into account.

JimmyH

2886 posts

Uber Geek

#744675 14-Jan-2013 17:27

qwerty7: People take out student loans without any real consideration. I have no idea how people can be comfortable having such big debt [...].

I'm not opposed to running up debts. I would take out a big debt to study if the degree boosted by earnings potential enough to justify it, or if it was something I really wanted to study. I also had to take out a big debt when I bought my house.

However, I agree with you, it amazes me how people casually run up huge debts when they don't have to. Personally, I worked all thought uni (full time in holidays, part-time during the year, and took Saturday and Sunday work whenever I could get it), as well as driving a clapped-out rusty old bomb, to minimise my debt on completion. And I'm glad I did, as well as cash-flow it got me a valuable work history and referees for entering the permanent job market. Actually, in hindsight, these were probably worth as much as the pay I got.

Running up a debt because it's the only way to build a valuable asset is one thing. Running it up for beer, holidays, a flash car or because you don't want to work baffles me. Whinging that you shouldn't have to pay it back after you have run it up annoys me.

ajobbins

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#744707 14-Jan-2013 18:32

As an overseas borrower, I have no issue with being charged interest on my loan while I am out of the country. The interest free scheme is designed to keep people in NZ and we all knew that. In my case, my higher AUD salary more than offsets the interest, and therefore I am still better off here.

I believe the $3k cap on repayments for overseas borrowers is a reflection of the fact that they really can't tell how much you are earning overseas, and therefore have to set an arbitrary payment amount.

In this guys case, he is only 'better off' in Australia if he can make enough extra money to cover the interest he will accrue on the loan compared to staying in NZ and having it interest free.

Having a student loan for me wasn't really a choice. These days, if you don't have a degree, you are going to be counting yourself out of even some of the more entry level jobs.

My parent's made 'too much money' for me to qualify for any kind of student allowance. The money I could borrow ($150 a week) would not even cover my rent, and I worked part time to make up the difference between what I could borrow and what it cost me to live. My parents were not in a position to support me financially.

My parents live in the Hawkes Bay, so I had no option but to live out of home in another city (Wellington) to study, so I did not have the luxury of staying at home like many of my peers did. The 'cost' of not living at home during my 3 years at Uni are probably upwards of $35,000 (3 years of rent, bills, food). Thankfully I was able to work part time so my student loan is less than this.

What does make me angry are my peers who lived at home while at uni, paid no board or expenses and who's parents income allowed them to qualify for a student allowance (mostly because they ran own businesses and were able to make it look on paper like they didn't make much). Those people usually didn't work part time, and were able to use their student allowance to fund their lifestyles. Some of them even banked the money. Now they are student loan free and buying their first houses - and some can't understand why others aren't in a position to. Differences in circumstances like this mean that someone who can live at home while studying could be upwards of $10,000 or more a year better off than someone who can't. /rant

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LittleGold

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#744713 14-Jan-2013 18:44

ajobbins: As an overseas borrower, I have no issue with being charged interest on my loan while I am out of the country. The interest free scheme is designed to keep people in NZ and we all knew that. In my case, my higher AUD salary more than offsets the interest, and therefore I am still better off here.

I believe the $3k cap on repayments for overseas borrowers is a reflection of the fact that they really can't tell how much you are earning overseas, and therefore have to set an arbitrary payment amount.

In this guys case, he is only 'better off' in Australia if he can make enough extra money to cover the interest he will accrue on the loan compared to staying in NZ and having it interest free.

Having a student loan for me wasn't really a choice. These days, if you don't have a degree, you are going to be counting yourself out of even some of the more entry level jobs.

My parent's made 'too much money' for me to qualify for any kind of student allowance. The money I could borrow ($150 a week) would not even cover my rent, and I worked part time to make up the difference between what I could borrow and what it cost me to live. My parents were not in a position to support me financially.

My parents live in the Hawkes Bay, so I had no option but to live out of home in another city (Wellington) to study, so I did not have the luxury of staying at home like many of my peers did. The 'cost' of not living at home during my 3 years at Uni are probably upwards of $35,000 (3 years of rent, bills, food). Thankfully I was able to work part time so my student loan is less than this.

What does make me angry are my peers who lived at home while at uni, paid no board or expenses and who's parents income allowed them to qualify for a student allowance (mostly because they ran own businesses and were able to make it look on paper like they didn't make much). Those people usually didn't work part time, and were able to use their student allowance to fund their lifestyles. Some of them even banked the money. Now they are student loan free and buying their first houses - and some can't understand why others aren't in a position to. Differences in circumstances like this mean that someone who can live at home while studying could be upwards of $10,000 or more a year better off than someone who can't. /rant

This is a pitifully short reply to your post but I absolutely agree. I was in the same situation, putting myself through uni as best I could without any choice about whether I got a student loan or not. I didn't even have a choice about going to uni because apparently you need a teaching degree to get employed as a teacher! Weird right?

I think if you make the choice to study (for whatever reason) and need to get a student loan (for whatever reason) you do so knowing that you will be required to pay that back. I know someone who failed papers repeatedly, swapped courses and continued to claim the $150 a week living costs and now owes over $120k on their loan and they never even completed a degree. They now earn approx $50k a year and will unlikely earn more than that. I also know for a fact that they aren't worried because they will just continue to pay off the minimum amount and when they die the loan gets wiped. Sad sad outlook. But that person deserves to have that debt and should be made to keep repaying it, wherever they end up living.

I'm never going to earn big money in my job but I will continue to pay my student loan and will pay extra when I can. Wen I moved to Australia I got a six month repayment holiday and accepted interest charged and then continued to pay it when I got back home. That's what I signed up for. Plus knowing I had that debt made me work harder for my degree, I didn't settle for c passes I made sure I got A's.

mudguard

2113 posts

Uber Geek

#744733 14-Jan-2013 19:10

1080p:
mudguard: I wish I could pay off my student loan using my Kiwisaver. It would be a 10% pay rise!

That is precisely the shortsighted mindset Kiwisaver was designed to combat.

Do you think the bulk of non home owning contributors are going to wait until they're 65 to pull the money out? I would say almost none. It will get pulled out for the home purchase. All you have to leave in is the kickstart and tax credits, the rest is yours.
I was lucky to have a small loan, I studied for 5 years, paid for 3 using savings and only borrowed tuition fees for post grad. But I suppose in theory I could drop kiwisaver contributions from 8% to the minimum and use the difference to increase the repayments on my loan, however, not far to go.

But I have colleagues at work that have roughly equal balances, ie $20k in kiwisaver and owing the same for student loan. I don't think it's unreasonable a proposition. You could even make it mandatory to stay in kiwisaver for set period of time afterwards.

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