Student loans on rise, paid slower

Student loans are getting bigger and graduates are taking longer to pay back the money they owe.

Figures from last year’s Student Loan Scheme Annual Report show the median loan balance in New Zealand grew from $10,833 in 2008 to $14,904 in 2016.

The median repayment time for someone with a bachelor’s degree also rose from just over six years, to81⁄2.

Since a peak in 2005, the number of people taking up tertiary education has declined.

New Zealand Union of Students’ Associations president Jonathan Gee said students worried they were not going to be able to pay back the loans they were accruing.

University fees and the cost of living had gone up, meaning students had to borrow as much as they could to get by.

‘‘What you see is the repayment times are going up and that’s in part a result of incomes becoming stagnant, in my opinion. The fact we might get higher incomes after we get our degree is not the reality students have.’’

Josh Clifford studied for four years at Wellington’s Victoria University, racking up a loan of $62,000. The 35-year-old moved to Sydney before he finished his degree. It was meant to be a working holiday, but he met the woman who is now his wife, and 10 years later they are still in Sydney.

‘‘I really do want to pay if off, but . . . I’ve got a young kid, and a mortgage, and just got a car loan. It’s a balancing act.’’

Because of interest, Clifford was struggling to make a dent in the principal loan.

He said anyone who borrowed money should pay it back, but there was not always a job in New Zealand for everyone who had graduated with a degree.

‘‘People sort of have to go abroad . . . who are trying to begin their career in a field they’ve studied for. There are those who want to begin their career quickly, but they are not always able to do so within New Zealand.’’

Labour education spokesman Chris Hipkins said there were various factors that lead to higher student loans and longer repayment times. Tuition fees continued to rise, as did living costs.

‘‘The long-term impact for people is quite significant, basically they have a large debt for longer,’’ Hipkins said.

‘‘If they’re weighed down with student-loan debt it will be difficult to get on the property ladder. It’s already a burden, and this is making it even harder for the next generation.’’

Universities New Zealand executive director Chris Whelan said when it came to fees increasing, one need only look at published annual accounts of the country’s eight universities to see they were not ‘‘raking in’’ a lot of money.

Two-thirds of the cost of tuition was covered by subsidies, and onethird was covered by the student.

Analysis of the 2013 Census showed the typical graduate was better off for having studied at tertiary level.

Tertiary Education, Skills and Employment Minister Paul Goldsmith said the decline in the number of people participating in tertiary education was largely because of the strengthening of the economy and labour market.

More Kiwis were going straight to work rather than tertiary-level study.

In 2000, the average student paid 33 per cent of the cost of their education. In 2015, that had decreased to 29 per cent.

‘‘There is no evidence to suggest that lower tertiary education participation rates are linked to the higher costs of tertiary study, and higher living costs,’’ Goldsmith said.