student loan idea (not mine)

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

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

1 | 2 | 3 | 4 | 5 | 6 | 7

1427 posts

Uber Geek
+1 received by user: 18

#456299 7-Apr-2011 11:13

in addition, as this thread reaches an end, or common agreement or thought, i will summarize the points For and Against and present them to my friend (again not naming) and let him know yes it is his choice, and his own risk. also, obviously, im not responsible for his choices (dont want to get blamed lol)

bazzer

3438 posts

Uber Geek
+1 received by user: 267

Trusted

#456309 7-Apr-2011 11:27

b0untypure1: in addition, as this thread reaches an end, or common agreement or thought, i will summarize the points For and Against and present them to my friend (again not naming) and let him know yes it is his choice, and his own risk. also, obviously, im not responsible for his choices (dont want to get blamed lol)

There are plenty of ways to invest the money he'll be getting, and depending on his investment strategy there is really little risk in it (although the returns would not really be that great either). In any case, it's money for nothing.

For all those who think it's "morally reprehensible", if you have the money to pay for your tertiary education/living expenses, is it mandatory to use it for this purpose? Or is it OK to get an interest free loan from the Government and keep your "nest egg" safe for when you've finished studies (i.e. as a house deposit etc). How is it any different?

In the end, the system is set up a certain way and there will always be people that exploit it (the same for anything). As long as they aren't breaking the law, then the problem is with the system, not with the morally reprehensible individual. Personally, I'll be paying plenty of tax in my life (plenty already even) so I would say take what you can get when you can get it. If you're eligible for a benefit/allowance but you don't really need it should you decline it?!

b0untypure1

1427 posts

Uber Geek
+1 received by user: 18

#456316 7-Apr-2011 11:36

i understand, my risk statement was around, if interest does get put back onto student loans.
i admit, yes it would be awesome to have a little "nest egg" to go towards an asset (house etc)
however, with living costs (what my friend intends to max out) the money from that (eg. $5,000) still has to be repaid in the future.
so the only real increase / gain he will be getting is the interest earned. (eg. $200) since the $5,000 investment = $5,000 increase in loan to be repaid.

so while you could put a down payment on a house in the future, there will still be a huge liability that will need to be cleared. also anyone earning over the threshold ($19,000) is required to make loan repayments.

which is why i would try to dis-encourage him to do so, since the gains are very little. and then tax and inflation set in.

feel free to add to my statement or put your point of view out there, this is an interesting discussion .

robbyp

1199 posts

Uber Geek
+1 received by user: 8

#456327 7-Apr-2011 11:54

mattRSK: Adding interest will send more people overseas looking for higher paying jobs.

It has proven that whether there is interest or not, it doesn't stop people moving overseas for higher paid jobs. If you are getting a lot more overseas, the interest doesn't really worry you.

kdc69

27 posts

Geek

#456332 7-Apr-2011 11:59

a common point missed here is that top earners, parents on $75k a year pay more tax for less services than lower income earners. So them benefiting from student loan may not be a bad thing. I think they should be able to take full loan if they can pay it ALL back as this effectively makes it free for the country and the person who is getting educated plus hopefully the educated one will reinvest in the country via taxes etc

mattRSK

822 posts

Ultimate Geek
+1 received by user: 3

Trusted

#456334 7-Apr-2011 12:02

kdc69: a common point missed here is that top earners, parents on $75k a year pay more tax for less services than lower income earners. So them benefiting from student loan may not be a bad thing. I think they should be able to take full loan if they can pay it ALL back as this effectively makes it free for the country and the person who is getting educated plus hopefully the educated one will reinvest in the country via taxes etc

Wealthy people don't pay tax.

Quic Broadband

Move to New Zealand's best fibre broadband service (affiliate link). Free setup code: R587125ERQ6VE. Note that to use Quic Broadband you must be comfortable with configuring your own router.

b0untypure1

1427 posts

Uber Geek
+1 received by user: 18

#456359 7-Apr-2011 13:01

robbyp:
mattRSK: Adding interest will send more people overseas looking for higher paying jobs.

It has proven that whether there is interest or not, it doesn't stop people moving overseas for higher paid jobs. If you are getting a lot more overseas, the interest doesn't really worry you.

+1
regardless of interest i will still aim to work in japan as an accountant

wreck90

780 posts

Ultimate Geek
Inactive user

#456366 7-Apr-2011 13:08

mattRSK:
kdc69: a common point missed here is that top earners, parents on $75k a year pay more tax for less services than lower income earners. So them benefiting from student loan may not be a bad thing. I think they should be able to take full loan if they can pay it ALL back as this effectively makes it free for the country and the person who is getting educated plus hopefully the educated one will reinvest in the country via taxes etc

Wealthy people don't pay tax.

Under what basis do you make this assertion?

I think it's quite wrong.

wreck90

780 posts

Ultimate Geek
Inactive user

#456379 7-Apr-2011 13:23

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

It is quite different!!

The taxpayer has worked hard to earn their money on which they must pay tax. The accountant ensures the taxpayer meets their legal obligation to pay the correct amount of tax. The accountant is obliged to make the allowable deductions. They'd be incompetent not to do so.

A student loan is intended to assist students with their living and study related costs.

If you are using the loan for personal enrichment then this is a complete abuse. The student in question has not 'worked' for this money nor have they earned it in any way. It is a handout.

To compare a undeserved handout with someone ensuring they pay the correct tax on hard earned money is ridiculous.

bazzer

3438 posts

Uber Geek
+1 received by user: 267

Trusted

#456381 7-Apr-2011 13:29

wreck90:
mattRSK: I can't see how it is different to somebody using an accountant to pay less tax with their business.

It is quite different!!

The taxpayer has worked hard to earn their money on which they must pay tax. The accountant ensures the taxpayer meets their legal obligation to pay the correct amount of tax. The accountant is obliged to make the allowable deductions. They'd be incompetent not to do so.

A student loan is intended to assist students with their living and study related costs.

If you are using the loan for personal enrichment then this is a complete abuse. The student in question has not 'worked' for this money nor have they earned it in any way. It is a handout.

To compare a undeserved handout with someone ensuring they pay the correct tax on hard earned money is ridiculous.

It's not a "hand out", it's a loan that needs to be paid back. I'll ask again, even if they have the money to pay for their tertiary study, why should they be compelled to use it for their studies if an interest free loan is available to them (and all other students)?

If the worse thing they're going to do is borrow it during the course, make the interest and pay it back at the end, I'm all for it. Far better than leeching off the government (loan + subsidised education) and then skipping the country for good. The cost of that on the taxpayer is far higher!

b0untypure1

1427 posts

Uber Geek
+1 received by user: 18

#456384 7-Apr-2011 13:34

i understand the point made on the actual loan itself. but how do you guys feel about un-neccesary additional borrowing (living costs) that have to be paid back (but still interest free) - borrowing extra for the reason to invest in a bank and get a (saddening, in my opinion) return

Lego

Shop now for Lego sets and other gifts (affiliate link).

bazzer

3438 posts

Uber Geek
+1 received by user: 267

Trusted

#456390 7-Apr-2011 13:43

b0untypure1: i understand the point made on the actual loan itself. but how do you guys feel about un-neccesary additional borrowing (living costs) that have to be paid back (but still interest free) - borrowing extra for the reason to invest in a bank and get a (saddening, in my opinion) return

He either:

a) spends his money on living expenses and saves the interest free loan; or
b) saves his money and spends the interest free loan.

The are functionally the same, and I don't believe that just because he can afford to pay his own living expenses that he should have to when there are other options open to him.

In my opinion, you'd be crazy not to take up the option. The same as an investment property owner should claim (past tense now, I guess) depreciation on an asset that isn't really depreciating (the house). Why wouldn't you?

wreck90

780 posts

Ultimate Geek
Inactive user

#456399 7-Apr-2011 14:13

bazzer:
wreck90:
mattRSK: I can't see how it is different to somebody using an accountant to pay less tax with their business.

It is quite different!!

The taxpayer has worked hard to earn their money on which they must pay tax. The accountant ensures the taxpayer meets their legal obligation to pay the correct amount of tax. The accountant is obliged to make the allowable deductions. They'd be incompetent not to do so.

A student loan is intended to assist students with their living and study related costs.

If you are using the loan for personal enrichment then this is a complete abuse. The student in question has not 'worked' for this money nor have they earned it in any way. It is a handout.

To compare a undeserved handout with someone ensuring they pay the correct tax on hard earned money is ridiculous.

It's not a "hand out", it's a loan that needs to be paid back. I'll ask again, even if they have the money to pay for their tertiary study, why should they be compelled to use it for their studies if an interest free loan is available to them (and all other students)?

If the worse thing they're going to do is borrow it during the course, make the interest and pay it back at the end, I'm all for it. Far better than leeching off the government (loan + subsidised education) and then skipping the country for good. The cost of that on the taxpayer is far higher!

You argue semantics. A $10,000 investment taken out over 5 years @10% interest rate will earn $1000. That is a 'handout' if the tax payer has funded the investment.

However,I do think students should receive the 'dole' if they are living away from home. It is ridiculous to say that an 25 year old is still a dependent child ( i think they use that age to determine eligibility to benefits?).

It is quite disgusting that the older generation who enjoyed free tertiary education are now denying the next generation the same privileges afforded to themselves.

mattRSK

822 posts

Ultimate Geek
+1 received by user: 3

Trusted

#456400 7-Apr-2011 14:15

wreck90:
mattRSK: I can't see how it is different to somebody using an accountant to pay less tax with their business.

It is quite different!!

The taxpayer has worked hard to earn their money on which they must pay tax. The accountant ensures the taxpayer meets their legal obligation to pay the correct amount of tax. The accountant is obliged to make the allowable deductions. They'd be incompetent not to do so.

A student loan is intended to assist students with their living and study related costs.

If you are using the loan for personal enrichment then this is a complete abuse. The student in question has not 'worked' for this money nor have they earned it in any way. It is a handout.

To compare a undeserved handout with someone ensuring they pay the correct tax on hard earned money is ridiculous.

What about the people who then go on and claim working for families benefits?

wreck90

780 posts

Ultimate Geek
Inactive user

#456404 7-Apr-2011 14:32

mattRSK:
wreck90:
mattRSK: I can't see how it is different to somebody using an accountant to pay less tax with their business.

It is quite different!!

The taxpayer has worked hard to earn their money on which they must pay tax. The accountant ensures the taxpayer meets their legal obligation to pay the correct amount of tax. The accountant is obliged to make the allowable deductions. They'd be incompetent not to do so.

A student loan is intended to assist students with their living and study related costs.

If you are using the loan for personal enrichment then this is a complete abuse. The student in question has not 'worked' for this money nor have they earned it in any way. It is a handout.

To compare a undeserved handout with someone ensuring they pay the correct tax on hard earned money is ridiculous.

What about the people who then go on and claim working for families benefits?

WFF is a 'benefit' which the labour government intended to boost the living standards of families with children. I've no criticism for those who legitimately qualify for WFF.

I dislike families who purposefully manipulate their financial position in order to receive WFF when they otherwise wouldn't have qualified. I put this in the same category as the 'student' who abuses the student loan.

(ps, I think WFF should be abolished, it was an election bribe which the country cannot afford).

1 | 2 | 3 | 4 | 5 | 6 | 7