Student Debt, Tax Will Skyrocket Under LabourTertiary Education
Student debt would skyrocket under Labour's blank cheque policy on student loans, while the ability of students to repay debt would be dramatically reduced under a high tax centre-left government, Tertiary Education Minister Max Bradford said today.
Mr Bradford said Labour was offering nothing more than vague un-costed promises over tertiary funding, which if Labour's heath policy was anything to go by, would only be affordable with large tax increases.
"Labour says it will tackle the growing burden of student debt, but under Labour's no-interest while studying policy, student debt would sky-rocket as no doubt the 50% of students who don't borrow now will take up the offer of a free loan.
"Not only will more students end up more in debt but they will only repay their loans 1-2 years earlier. This is not a big bonus for having more students in debt.
"And in order to fund its loans policy, Labour is going to tax hard-working successful graduates at a higher level for every year of their working lives.
The Alliance would drag tax rates higher than Labour will admit," Mr Bradford said.
"National's policy will reduce the interest rate while students are studying to 5.7%, while keeping a small disincentive to stop students borrowing unnecessarily.
"It must also be remembered that the proposed $400 million tax cuts will be balanced by an injection of $400 million into social services. Social services and education will not miss out under National's tax cuts," Mr Bradford said.
"Spending on Equivalent Full-time Student (EFTS) subsidies increased from $993 million in 1991 to $1,153 million in 1998 - an increase of 16.1%. Also, the allocation of an additional $155 million over three years was announced in last year's budget.
"Recently, the Government injected an extra $5 million to ensure that average per student subsidies do not decrease in the year 2000," Mr Bradford said.