Think tanks wants interest back on student loans

  • 18/08/2016
Think tanks wants interest back on student loans

It's been over 10 years since student loans were made interest-free.

Since the introduction of the scheme by Labour in 2005, the Government has written off $6 billion.

When interest was accrued, half of borrowers paid their loans back in seven years.

Under today's interest-free scheme it's only marginally better, taking half of borrowers 6.7 years.

The New Zealand Initiative doesn't see the merit in interest-free student loans; its report suggests we restore the interest component.

It claims interest-free student loans have been ill-targeted and are costly to the taxpayer.

Head of research Dr Eric Crampton spoke to Paul Henry this morning about why he wants to reinstate interest-free loans.

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