student loan idea (not mine)

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

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245 posts

Master Geek

#456430 7-Apr-2011 15:16

Must admit - the thought of drawing down the max and then picking up interest on a student loan p*$$es me off greatly...
I started uni in 1996(?) and graduated in 2000 with a postgrad qualification. I was not eligible for an allowance, but did fortunately get a part time job.

My total loan for 4 years was $40,319 - IRD has stung me with an additional $32,653 worth of interest until the loan write off scheme, bringing my total loan to 72,972.29 ... fortunately I am now down to $8,210.

Sure, I have benefitted from the interest free - however the tax payer has - or will - benefit to the tune of 32K, plus all my taxes to date. It has been a very hard road to get it down to where it is and to hear about people rorting the system really irks me - it needs to be tightened up sensibly so that it can be realistically paid off but not abused.

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bazzer

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#456435 7-Apr-2011 15:26

wreck90: 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.

Feel like tackling my question then (reproduced below for your benefit)?

"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)?"

Note, that unlike your WFF point, the student here has done nothing to "work" the system. All they've done is become a student which has made them eligible for a particular benefit. Why shouldn't they use it?

wreck90

780 posts

Ultimate Geek
Inactive user

#456443 7-Apr-2011 15:51

bazzer:
wreck90: 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.

Feel like tackling my question then (reproduced below for your benefit)?

"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)?"

Note, that unlike your WFF point, the student here has done nothing to "work" the system. All they've done is become a student which has made them eligible for a particular benefit. Why shouldn't they use it?

I think I answered the question.

But to spell it out further, a student loan is intended to help people who need money for their education.

If everyone had enough money to pay for their education , the student loan scheme would not exist so it is clear that the loans are not aimed at those with sufficient money to finance their own education.

I'm just saying it is ethically wrong. The student is well within their legal rights to skim the interest of taxpayer funded loans. But, you won't find many taxpayers sympathetic to this behaviour.

bazzer

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#456452 7-Apr-2011 16:16

wreck90: But to spell it out further, a student loan is intended to help people who need money for their education.

If this were the case, it would be asset tested. There's no mention of "need" in the student loan criteria. We're all welcome to our opinions. Ours don't differ too much actually. While I agree that the student is taking advantage, I don't put the blame on the student, but on the system. The student is not screwing the system, they are just working within the parameters defined. Therefore the system needs changing.

If you had the cash to buy something but someone offered you a no-strings attached interest free loan with which to buy it, why would you pay cash for it when that cash could stay in the bank? It just makes financial sense, there's no ethics involved at all. Why should I care if it's a bank, finance company or the tax payer offering the loan? Do I feel bad when my credit card company gives me an interest free loan for 55 days? Of course not.

I feel much more strongly about people taking out student loans and intending to never pay them back.

mushion22

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#456469 7-Apr-2011 16:41

Hurr dont forget the $60 establishment fee and $40 maintenance fee. Also, discussing breaching your student loan contract is a topic not best discussed in a public forum.

wreck90

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Ultimate Geek
Inactive user

#456495 7-Apr-2011 18:20

bazzer:
wreck90: But to spell it out further, a student loan is intended to help people who need money for their education.

If this were the case, it would be asset tested. There's no mention of "need" in the student loan criteria. We're all welcome to our opinions. Ours don't differ too much actually. While I agree that the student is taking advantage, I don't put the blame on the student, but on the system. The student is not screwing the system, they are just working within the parameters defined. Therefore the system needs changing.

If you had the cash to buy something but someone offered you a no-strings attached interest free loan with which to buy it, why would you pay cash for it when that cash could stay in the bank? It just makes financial sense, there's no ethics involved at all. Why should I care if it's a bank, finance company or the tax payer offering the loan? Do I feel bad when my credit card company gives me an interest free loan for 55 days? Of course not.

I feel much more strongly about people taking out student loans and intending to never pay them back.

Interest free student loans were a hastily assembled election bribe that did not receive due diligence by the then labour government. I can assure you, Helen Clark and Michael Cullen would be appalled at 'rich pricks' who are abusing the student loans.

Of course, fleeing the country with an intent to avoid repaying the loan is the worst case and a far worse problem.

mattRSK

822 posts

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#456531 7-Apr-2011 20:16

mushion22: Hurr dont forget the $60 establishment fee and $40 maintenance fee. Also, discussing breaching your student loan contract is a topic not best discussed in a public forum.

Where has the breach of contract been mentioned?

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Batman

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#456612 8-Apr-2011 00:05

bazzer:
wreck90: But to spell it out further, a student loan is intended to help people who need money for their education.

If this were the case, it would be asset tested. There's no mention of "need" in the student loan criteria. We're all welcome to our opinions. Ours don't differ too much actually. While I agree that the student is taking advantage, I don't put the blame on the student, but on the system. The student is not screwing the system, they are just working within the parameters defined. Therefore the system needs changing.

If you had the cash to buy something but someone offered you a no-strings attached interest free loan with which to buy it, why would you pay cash for it when that cash could stay in the bank? It just makes financial sense, there's no ethics involved at all. Why should I care if it's a bank, finance company or the tax payer offering the loan? Do I feel bad when my credit card company gives me an interest free loan for 55 days? Of course not.

I feel much more strongly about people taking out student loans and intending to never pay them back.

asset tested?!

when i was in uni we weren't eligible for allowance because our parents struggled so hard to support the 3 of us. i had friends whose parents lived in mansions and themselves (the uni students) drive brand new cars and are eligible for the max student allowance. markovnikov's rule.

Batman

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#456613 8-Apr-2011 00:05

were

bazzer

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#456703 8-Apr-2011 12:00

wreck90: Interest free student loans were a hastily assembled election bribe that did not receive due diligence by the then labour government. I can assure you, Helen Clark and Michael Cullen would be appalled at 'rich pricks' who are abusing the student loans.

No doubt, but I couldn't care less what they think, I don't see the relevance. In any case, they are more at fault than the sudents abusing it, I'd say.

bazzer

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#456704 8-Apr-2011 12:03

joker97: asset tested?!

when i was in uni we weren't eligible for allowance because our parents struggled so hard to support the 3 of us. i had friends whose parents lived in mansions and themselves (the uni students) drive brand new cars and are eligible for the max student allowance. markovnikov's rule.

I don't really know what you mean. I understand what you're saying but I don't know why you're saying it. We're talking about loans, not allowances.

Also, on a sidenote, I doubt that the reason you weren't eligible was because your parents struggled so hard.

mushion22

297 posts

Ultimate Geek

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#456853 8-Apr-2011 20:44

mattRSK:
mushion22: Hurr dont forget the $60 establishment fee and $40 maintenance fee. Also, discussing breaching your student loan contract is a topic not best discussed in a public forum.

Where has the breach of contract been mentioned?

You haven't mentioned any breaching it, but if you acted on this idea you would be.

5 What you can use the loan for
5.1 We will pay advances under your loan contract for your:
(a) fees, directly to your education provider;
(b) course-related costs, to your chosen bank account; and
(c) living costs, to your chosen bank account each week starting in the second week of the loan period. The final payment will be made at the end of the loan period.

http://www.studylink.govt.nz/documents/newletters/student-loan-terms-and-conditions-oct-2010.pdf

mattRSK

822 posts

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#456857 8-Apr-2011 20:58

mushion22:
mattRSK:
mushion22: Hurr dont forget the $60 establishment fee and $40 maintenance fee. Also, discussing breaching your student loan contract is a topic not best discussed in a public forum.

Where has the breach of contract been mentioned?

You haven't mentioned any breaching it, but if you acted on this idea you would be.

5 What you can use the loan for
5.1 We will pay advances under your loan contract for your:
(a) fees, directly to your education provider;
(b) course-related costs, to your chosen bank account; and
(c) living costs, to your chosen bank account each week starting in the second week of the loan period. The final payment will be made at the end of the loan period.

http://www.studylink.govt.nz/documents/newletters/student-loan-terms-and-conditions-oct-2010.pdf

So I can get the money paid into my bank account.....

mushion22

297 posts

Ultimate Geek

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#456859 8-Apr-2011 21:08

So I can get the money paid into my bank account.....

Sure can, if its for the purposes stated there.

Edit: Read those terms carefully, particularly the "for your" bit

Mooseboy

124 posts

Master Geek

#457331 10-Apr-2011 23:04

mushion22:

So I can get the money paid into my bank account.....

Sure can, if its for the purposes stated there.

Edit: Read those terms carefully, particularly the "for your" bit

Student loans get paid directly to your tertiary education provider, course related costs get paid into your bank account and may be audited to check that you're only spending it on course related items.

Living costs are different, in that its basically a student allowance that anyone can receive, and that needs to be paid back.

If someone was receiving a Student Allowance and doing what was suggested in the original post, I would have a problem with it. Doing it with the Living Costs? Not so much.

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