There is a better way to change student loan repayment rates that will help graduates who can afford to pay their loans off faster, without putting the squeeze on young families, the Green Party said today.
"The student loan repayment rate should be progressive, so that graduates pay more of their student debt the more they earn," Green Party students spokesperson Holly Walker said.
"Instead of raising the repayment rate to 12 percent across the board, the Government should introduce progressive bands of income. Those on lower incomes would pay less on their student loan debt than the current rate of 10 cents in the dollar, while those on higher incomes would pay more.
"This would achieve faster repayment rates without placing an unnecessary burden on low-income graduates and young families.
"Nearly half of all young couples with children have student loan debt. Forcing them to pay 12 percent of their income on their student loans when they may be struggling to make ends meet, starting out in their careers, or trying to service a mortgage, is unfair.
"It makes more sense for a higher repayment rate to kick in when graduates are actually earning higher incomes and are in a position to pay their loans off faster."
Ms Walker said the initial repayment threshold of $19,084 should also be increased.
"It is absurd that the Government expects students and graduates to start paying 12 percent of their income towards their student loan when they earn less than someone working full-time for the minimum wage.
"It is nonsense to compare people earning the minimum wage to high-earning graduates and suggest they can afford to meet higher repayment rates.
"In Australia, graduates are not required to start repaying their student loans until they earn over $48,000, and the repayment rates are progressive.
"If we want to catch up with Australia, we should emulate their progressive student loan repayment scheme. Instead the Government is essentially inviting graduates to move across the ditch with these draconian student loan and allowance changes.
"Progressive repayment rates that kick in later will encourage graduates to stay in New Zealand, contribute to the economy, and pay their student loans off faster when they are able to do so.
"This is a much better way to change student loan repayment rates than raising them to 12 percent across the board."
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