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\nOver the past decade, there has been a growing debate about the value of student loans and the long-term impact of debt for those entering the workforce \u2013 particularly for students who struggled to complete their studies.<\/p>\n
\nOver the past decade, there has been a growing debate about the value of student loans and the long-term impact of debt for those entering the workforce \u2013 particularly for students who struggled to complete their studies.<\/p>\n
In the United States, where the average student loan is US$30,000 per borrower, the Biden administration recently announced plans to cancel\u00a0US$32 billion<\/a>\u00a0worth of loans. This move has been\u00a0blocked indefinitely by the courts<\/a>\u00a0but it has put the spotlight squarely on student debt both in the US and elsewhere.<\/p>\n In New Zealand, some\u00a070% of all students<\/a>\u00a0borrow from the government to study. The collective student\u00a0debt is NZ$16 billion<\/a>, with the average debt per borrower sitting at around $24,000.<\/p>\n As students rack up ever-increasing levels of debt, the question has been raised about whether low-performing students should have their loan access cut off<\/p>\n Considering the debate around borrowing for study and calls for the debt to be wiped, my colleague and I investigated the\u00a0effects of access to student loans<\/a>\u00a0on university re-enrolment, graduation and earnings for academically struggling students.<\/p>\n Despite\u00a0concerns around using student loans for study<\/a>, funding higher education through government-funded loans can have advantages. At their most fundamental level, student loans reduce the cost of the tertiary education system on the broader tax base, striking a balance between\u00a0public investment<\/a>\u00a0and individual responsibility.<\/p>\n Student loans give students more choice as to where to study and thus can enhance\u00a0competition across education institutions<\/a>. Loans also offer an incentive for students to\u00a0put more effort into study<\/a>\u00a0as they share some of the education cost.<\/p>\n Sharing costs allows the government to fund more students. Student loans can also\u00a0reduce barriers to study<\/a>\u00a0resulting from tuition fees, offering students from lower income families access to tertiary education.<\/p>\n While most students who complete their qualifications will\u00a0increase their earning potential<\/a>\u00a0and be able to pay off their debt, there is a concern for low-performing students who may accumulate a\u00a0large amount of debt<\/a>\u00a0but fail to graduate.<\/p>\n Should NZ be forgiving student loan debt? https:\/\/t.co\/xf6fRpIT27<\/a><\/p>\n \u2014 Citizens Advice Bureau – Petone (@CABPetone) August 29, 2022<\/a><\/p><\/blockquote>\nThe student loan debate<\/strong><\/h4>\n
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