OnPoint by Keith Ng

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OnPoint: Student Loans are Loans (Duh.)

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  • Kumara Republic, in reply to Bart Janssen,

    Personally I want the best and brightest to feel free to choose more er useful professions (apologies to lawyers and economists but frankly we kinda have enough already).

    In essence this is social engineering but without any intelligent reasoning behind the engineering.

    There was talk of enrolment caps for law and commerce places under the Clark Govt, but I don't know if anything came from that.

    As for social engineering, cuts and tightening of eligibility can easily foment sour grapes in the long run - "If I can't be eligible, why should anyone else?"

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • Crunchy Weta, in reply to Bart Janssen,

    Oh well good. MAybe we will get some economists who actually know what they are doing. Well played that government.

    Mamaku • Since Nov 2006 • 35 posts Report Reply

  • Hilary Stace,

    Steven Joyce obviously isn't a details man. Grant Robertson has been trying to get some specifics from the Minister.

    Wgtn • Since Jun 2008 • 3226 posts Report Reply

  • Kumara Republic,

    Prostetnic Vogon Joyce is probably gambling that students will be too disillusioned, apathetic, or toadyish to challenge the student loans & allowance changes.

    How many examples of ‘socialism for the rich’ are there that Prostetnic Vogon Joyce et al hold sacred, that Labour could safely take a chainsaw to?

    Off the top of my head I know a few:
    - The “Holiday Highway” just needs a few black spots fixed, not a gold-plated $3bn plus ego trip.
    - the $400m irrigation scheme in Canterbury. Aren’t farm subsidies so 1986?
    - RBNZ hack Murray Sherwin has recently suggested re-examining the Accommodation Supplement. A number of social housing advocates regard the AS as a private landlord subsidy, and others in the Interest.co.nz thread make mention of interests in the property bubble.
    - Make tax evasion a bigger wedge issue than benefit fraud.
    - Reverse the top tax cuts, but adjust up the thresholds.

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • BenWilson, in reply to Kumara Republic,

    Prostetnic Vogon Joyce is probably gambling that students will be too disillusioned, apathetic, or toadyish to challenge the student loans & allowance changes.

    Or simply powerless, as they were when I was a student. We were never able to stop anything. Students actually enrolled aren't a very big voting bloc, and no one listens to kids. 3 years of an adult life, and zip, it's behind you and you're paying off your debts. When you've done that, then you're bitter on anyone who doesn't. It was always an evil, stupid, divisive, impoverishing idea, very difficult to remove once entrenched.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Kumara Republic, in reply to BenWilson,

    When you’ve done that, then you’re bitter on anyone who doesn’t. It was always an evil, stupid, divisive, impoverishing idea, very difficult to remove once entrenched.

    Which neatly ties in to my post before. Sadly, appeal to sour grapes is one of the most effective forms of divide-and-rule – it is but a subset of fomenting latent inferiority complexes, which Robert Reich and Paul Graham have previously explored. It happened most recently with the vitriol towards the striking Ports of Auckland wharfies.

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • Lucy Telfar Barnard, in reply to Bart Janssen,

    And that means they won't become ecologists or biologists or theoretical mathematicians or analytical chemists or god forbid any of the Arts. Instead they will all choose to be lawyers or economists and similar professions where salary ramps up fast and high. Note these are the brightest they won't be mere clerks.

    I disagree.
    1. The brightest students have always been able to choose between careers which will pay well, and careers which they will find intellectually or socially rewarding (not that they're necessarily mutually exclusive), and they have always been making that choice. Sure, the economics of it just got slightly worse, but the idealistic young will still go into areas they think matter. If they weren't idealistic they'd be doing law and economics or civil engineering anyway.
    2. Indeed, I wouldn't mind seeing a few more idealistic youth going into civil engineering; they might encourage their classmates to think about the world in a different way.
    3. The percentage of students eligible for student allowances is pretty small, and the percentage of those who'd want to do post-grad study even smaller. On numbers (rather than percentages of each group), most of the best and brightest aren't eligible for allowances anyway.
    4. The true best and brightest get scholarships for post-graduate study, and will be reasonably confident of their ability to do so.

    N.B. This doesn't mean that I think limiting the allowance to 200 weeks is a good idea. It just means that I don't think it will have much impact on the study decisions of the brightest students.

    Wellington • Since Nov 2006 • 585 posts Report Reply

  • James Clark, in reply to Lucy Telfar Barnard,

    This doesn’t mean that I think limiting the allowance to 200 weeks is a good idea. It just means that I don’t think it will have much impact on the study decisions of the brightest students.

    On that point I agree with Lucy.

    Bart mentions:

    They can work out that they will have a bigger debt the longer they stay at University. And they also can work out which professions pay the most and hence which professions will clear their debt fastest and easiest.

    This is describing students that are gong to be economists or civil engineers anyway.

    For the best and brightest, balancing their cheque account is unlikely to be a top priority. I don't think it will have any bearing on which country they will end up in either. Mathematicians that have their eyes on Cambridge or MIT will still end up in those places.

    On the subject of funding tertiary education as an investment (that Keith touched on) I think a much stronger topic is that of full funding in exchange for bonded employment. Govt will fully fund your degree provided you agree to work for govt for x years. That could be CRI or civil service or something else valuable to the public (e.g. Dr in public health system). Debt is released after service and you are free to go on and make big bucks in the private sector if you wish.

    No reason why that could not even fund overseas study where that would make sense. It's already done elsewhere.

    exile • Since Nov 2006 • 18 posts Report Reply

  • Fooman, in reply to Ben Curran,

    Currently, for certain degrees (PhD is one of them) you can get a 150 week extension

    Back, when I were lad...

    I was doing PhD following on from BE (Hons). I used up one year of allowance as a undergrad, followed by 3 years of (interest bearing) loans. Postgrad funding was loans until I became eligible for student allowance again (my parents had the temerity to earn a tad more than 50k a year before tax, and were expected to support 3 children in tertiary study away from home. Solution: Thanks, Student Loans!) I hit the 200 week limit (easier to do with post-grad study, consumed the remaining allowance allowance at the rate of 52 weeks per year, rather than the ~30 weeks p.a. of a undergrad degree). I found, much to my amazement, that a M.E. was an approved long course, but a PhD in the same department was not!

    It's sort of nice to see things have changed...

    FM

    Lower Hutt • Since Dec 2009 • 87 posts Report Reply

  • Bart Janssen, in reply to Lucy Telfar Barnard,

    It just means that I don’t think it will have much impact on the study decisions of the brightest students.

    James and Lucy. Sorry I gave the impression I was theorizing.

    It wasn't just me guessing what their behaviour might be but instead me passing on the upshot from several conversations with faculty. They have been seeing, during the student loan era, a shift in the quality of students taking the sciences. these are really bright kids who stand out in the stage I classes (yes lecturers do notice). aWhen they talk to those kids they simply say they'd love to do biology/chemistry/maths but they won't because they want to be able to pay off their loans.

    This is real and it is happening right now. We can see it when we try and find students for PhDs, we can see it when we try and find technicians and try and fill post-doc positions. The quality is just not there. When we ask our colleagues in the university they say the bright ones just aren't taking the sciences any more.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • BenWilson, in reply to James Clark,

    On the subject of funding tertiary education as an investment (that Keith touched on) I think a much stronger topic is that of full funding in exchange for bonded employment. Govt will fully fund your degree provided you agree to work for govt for x years.

    The reason that won't happen is because that would involve the government guaranteeing a job to students. It would be snapped up by practically every student, I'd expect, what would there be to lose? They're bonded to their debt anyway. If they got a better job, they could pay off the bond. If not, take the government job.

    It's not a bad idea, quite the opposite, I think it's an excellent idea, trumped only by the even better idea of free education with a reasonable allowance for everyone.

    @DeepRed

    Sadly, appeal to sour grapes is one of the most effective forms of divide-and-rule – it is but a subset of fomenting latent inferiority complexes

    I'm not sure inferiority complexes are the source. It's an appeal to people's sense of fairness. That's what's evil about it. Once it becomes part of the basic structure of life, then it becomes a radical suggestion that the debt was odious. It would be unfair to forgive one person's debts and not another's and when the other's has been already paid off, to forgive it would involve giving them the entire value of the debt and all the repayments back. That's considered a very radical idea, even though it would be a massive boon to the economy. People have their struggles personalized by their debts, their pride bound up in the repayment, and their ability to judge others who can't/don't repay is lessened. When the idea of it is that it's a common struggle in which shirkers are the enemy, rather than a struggle that should never have happened, then real solutions can't even enter discussion.

    Long term, I'd expect that the outcome on education of all this debt will be exactly what it has been for property. Massive inflation of the value of something that isn't really that great. Just as a basic house isn't really that fucking awesome, something that humans have had since time immemorial, so will our educations become, something that we have to have just to subsist, something that costs us a big fraction of our productive lives, and in doing so takes away from every other contribution we could make to our society. People who turn away from it will increasingly end up better off, although the best off will still be those who just buy into the debt-slavery and give their entire lives to it, and suffer no misfortunes that tip them into the paupery sitting just around the corner from such a risky path. This will typically be achieved by coming from wealth in the first place.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Steve Barnes,

    With all the interest in the Sky City Casino you would think that this "Government" would see betting on students to be a better return than say, a pokie machine or 500.
    They should just take a punt. If a graduate stays their entire life at uni and never pays a cent back they may well become an asset to the university (that don't mean you have a mandate to sell them johnkey) if they go on to get paid squillions and become a world leader in their field (unless that field has been sold to johnny foreigner) then collect your winnings.
    My point is that even if someone gets a degree and decides they want to do voluntary work for the rest of their lives then so be it, the "Government" looses out, financially, but the country gains in other ways. If, on the other hand, the student does well, then the gamble pays off and johnkey gets a pocketful of loose change.
    This would entail, of course, an increase in interest but a floor on earnings, say 2 times the average wage.
    But then again I'm all for free tertiary education, good student allowances and less billionaires, like I've said before, wasn't all this automation in the factories and mines supposed to make us ALL better off?.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • bmk,

    I think this policy could end up being a net revenue loser. As pointed out the only money they make from this policy is the savings on interest. However, it won't take too many people choosing to move overseas and make no payments at all to offset this.

    I have recently graduated and am now working and paying a marginal rate of 60 something percent Tax + Child Support + Student Loan. I don't really object to any of this (certainly not the tax and child support) however raising my student loan repayments will make my budget go from having almost no spare money to having no spare money.

    It makes moving to Australia far more tempting. And if I do move to Australia I will still pay my Child Support (as I feel this is a moral obligation) but would have no intention of repaying my student loan. I'd have no moral qualms about this as I feel the very fact that I have a student loan is the result of a great inter-generational theft put on my generation. Also if I were to move overseas the govt. would also be losing the tax I currently pay.

    It wouldn't take too many people to do this and then this policy will actually cost the country more money than it would make.

    Since Jun 2010 • 327 posts Report Reply

  • James Butler, in reply to Lucy Telfar Barnard,

    the idealistic young will still go into areas they think matter. If they weren’t idealistic they’d be doing law and economics or civil engineering anyway.

    I'd just like to suggest that it is perfectly possible to want to study Law, Economics or Civil Engineering for idealistic reasons. Commerce (and its brethren such as the "Bachelor of Property") is about the only discipline in which it isn't, IMHO.

    Auckland • Since Jan 2009 • 856 posts Report Reply

  • Lucy Stewart, in reply to Bart Janssen,

    This is real and it is happening right now. We can see it when we try and find students for PhDs, we can see it when we try and find technicians and try and fill post-doc positions. The quality is just not there. When we ask our colleagues in the university they say the bright ones just aren’t taking the sciences any more.

    Which is interesting, because from my perspective the problem is an overload of good people for few post-doc positions. Frankly I'm not really considering post-docing in NZ because I just don't expect the positions to be there. Is the opposite really the case?

    OTOH, when I think of the very bright kids I went to high school with, it's true; they're all lawyers or doctors now. Mostly lawyers. A lot of them liked science and did well at it but it wasn't the route they chose at university, even so.

    They also increase the repayment rate as income increases, in recognition that those who have done particularly well from their education should be repaying society commensurate with the additional financial benefit they are getting; after all, a dollar today is worth more than a dollar tomorrow.

    I like this. I certainly feel the current repayment threshold is too low - below minimum wage, really? That's when we think people should start paying back their loans? It screws up the whole concept of a minimum wage, which is that it's a minimum you can live on.

    Wellington • Since Nov 2006 • 2105 posts Report Reply

  • Sacha, in reply to Steve Barnes,

    you would think that this "Government" would see betting on students to be a better return than say, a pokie machine or 500.

    Backing ourselves would be truly ambitious, yes. Now who's pointing that out?

    Ak • Since May 2008 • 19740 posts Report Reply

  • Kate Hannah, in reply to Bart Janssen,

    + a million. Thanks Bart. Have been trying to figure out the gist of the issue - and this is it. Thank you.

    Auckland • Since Mar 2010 • 107 posts Report Reply

  • Marcus Turner, in reply to BenWilson,

    The inflation of house prices is a problem elsewhere too. This article is about Canada.

    Since Nov 2006 • 212 posts Report Reply

  • Matthew Poole, in reply to Lucy Stewart,

    I certainly feel the current repayment threshold is too low – below minimum wage, really?

    Aye. Really. Minimum wage is $13.50/hour. $13.5*40*52=$28,080 (which is a fucking pittance in itself). Repayment threshold is $19,084 according to the IRD. So it's slightly over 2/3 of full-time minimum wage ($18,701), but only slightly.
    Full-time on the Australian minimum wage of AUD15.51/hour works out to be AUD32,260, or slightly below 2/3 the repayment threshold for FY2013 of AUD49,095. Interesting reversal there.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Kumara Republic, in reply to bmk,

    It wouldn’t take too many people to do this and then this policy will actually cost the country more money than it would make.

    Either that, or declare en masse bankruptcy. It'd be very messy - as in Greek or Spanish messy - but the message would be stark.

    The southernmost capital … • Since Nov 2006 • 5441 posts Report Reply

  • BenWilson, in reply to Bart Janssen,

    When we ask our colleagues in the university they say the bright ones just aren't taking the sciences any more.

    Even for med students?

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Bart Janssen, in reply to BenWilson,

    Even for med students?

    Medicine isn't science, at least not the way we mean it. Mostly talking about research level science, where you try and discover something new or figure out how to apply a discovery to a new situation.

    In fact medicine is a perfect example of the problem we often see, good students who like research but choose medicine because the pay is better.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Bart Janssen, in reply to Lucy Stewart,

    Which is interesting, because from my perspective the problem is an overload of good people for few post-doc positions.

    From the perspective of trying to hire post-docs, nope. But bear in mind we pay crap. Really good post-docs go overseas where they can both do better research and get paid more for it.

    If you are actually good, as in A grade good, most places in NZ will move Heaven and Earth to find a way to employ you, except of course paying you more money. Because frankly all we see are B grade and worse. And we make good use of B grade folks, the reality is most of the science in NZ is done by solid hard working B grade folks.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Bart Janssen, in reply to James Butler,

    I’d just like to suggest that it is perfectly possible to want to study Law, Economics or Civil Engineering for idealistic reasons.

    I know James. Some of my best friends are ... really I have a friend who has a PhD in international conflict law. To be fair it is probably one of the worst paying law degrees possible :).

    But there is a balance in a society. All lawyers and no engineers results in really great contracts for buildings nobody knows how to build.

    Auckland • Since Nov 2006 • 4460 posts Report Reply

  • Sacha, in reply to Bart Janssen,

    Christchurch

    Ak • Since May 2008 • 19740 posts Report Reply

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