Average student owes $21k as debt ‘balloons’

Student loan debt continues to rise, with the average student now $21,000 in the red.

Almost 731,800 people have a student loan, with a nominal total of $15.3 billion of debt.

More than 90 per cent of students borrow to pay their fees, a Ministry of Education report said, with the biggest rise in costs from fees hikes.

In 2015, $1073 million was drawn from the loan scheme to pay for fees — 64 per cent of all money borrowed that year.

The second-largest driver of costs was the cost of living, the report said, representing 26.1 per cent of all money drawn in 2015.

In that same year, the average amount borrowed was $8888, a rise of 3.5 per cent on the previous year. The 2013-2014 year saw a similar rise.

Bachelor-degree students borrowed an average of $9676 each in 2015, while masters and postgraduate loans averaged $10,300.

Students were leaving university with an average of between $16,600 and $17,220 of debt, with bachelor students tending to borrow the most.

Labour’s education spokesman, Chris Hipkins, said student debt “continues to balloon”. “Participation in tertiary education peaked in 2009/10 and has been steadily declining ever since as the effects of a National Government bed in,” he said.

“Meanwhile the accumulated debt of those who do complete tertiary study has been climbing steadily, increasing a whopping 37 per cent under National compared to just 9 per cent under [Labour].”

The average loan balance at June 30 was close to $21,000, the report said, while the average repayment time is now 8.4 years.

Record amounts of student debt are being written off for bankruptcy, with $17.6m wiped from the books in the 2015-16 year. Because of the death of the borrower, $15m was written off.

The number of domestic students enrolled in tertiary education is down since 2005, which the report said was mainly due to a fall in enrolments in certificate-level qualifications after moves to strengthen quality.

Fulltime equivalent student places have declined since peaking in 2010. The report pointed to a stronger labour market since 2010.

Tertiary Education Minister Paul Goldsmith said New Zealand spent more than $3.1b on student loans in 2015 — “three times the OECD average on financial aid to students, with only the UK spending more”.

A strengthening economy, creating 250,000 jobs over the past three years, was the main reason for a fall in those opting for tertiary study.

Universities NZ chief Chris Whelan said graduates earned between $1.3m and $4m more over their working lives than a non-graduate.