Children ‘will have to wait’

Caitlin, a 27-year-old Wellington professional, pays $235 a week towards renting a room in a flat with her partner and sees $200 a fortnight go out of her wages to pay off her $60,000 student loan. She says starting a family will have to wait.

“I wouldn’t want to have children when I’m renting,” she says.

“I had to move this year when the landlord wanted to put the rent up by $200 a week. We offered to pay $100 more and they refused, and I don’t want to be in that situation if I have children.

“I would like to own a house and then think about it, but that’s five or 10 years away.

“And I’m in a privileged position. I have quite a secure job, I have a regular salary. There would be lots of people in a much worse position than I am.”

Landscape architect Lance Millward, 47, says he and his wife Joleen, a teacher, went to Japan in 2001 after graduating so they could earn enough to pay off student loans of about $52,000 between them.

“At the time it was very good income there and the cost of living was cheaper than Auckland,” he says.

But the cost was postponing their family.

“Our children are 8 and 11 now, most of my friends have high school-aged kids, so you end up with everything quite a lot delayed,” he says.

“That means you’re kind of forced into having a smaller family unless you take the risk of having children after 40, which they don’t recommend.”

Student loans have only been one factor in delayed home ownership and childbearing.

They made up only 4 per cent of total NZ household after-tax annual incomes by 1998 and 9 per cent today, while total household debts have soared from 75 per cent of after-tax household income to 125 per cent.

A 2003 study by Waikato University economists John Gibson and Grant Scobie found that the chances of a nonpartnered person owning their home were reduced by 60 per cent if they had an outstanding student loan, after allowing for age, income sources and other factors.

But they found the opposite effect for couples. Couples were actually 11 per cent more likely to own their own homes if they had a student loan, even after allowing for other factors — perhaps because of factors that could not be measured such as stable career paths and perseverance.

Consequently, Gibson and Scobie found that student loans had no significant effect on the number of children that people had.

A study this year by Wellington economist Isabelle Sin and Stanford’s Ran Abramitzky found that domestic students completing bachelor’s degrees between 2005 and 2013 were slightly less likely to have children within six years of graduating if they had bigger student loans when they graduated, but again the difference was not statistically significant.