Fiddling around with the concept of student loan fairness

The government is having a little fiddle with student loans: a minimal easing of the rate of repayment (12% down to 10%) for those who stay home and, with all the moral indignation that Nicola Willis can muster, a heavy hand on those who 'take their skills offshore after receiving a heavily subsidised tertiary education' (ODT 31.8.26). 'It's not fair,' she says. One wonders if, for the sake of moral consistency, we should send overseas graduates home if they haven't paid off their student debt or, even worse, have been the beneficiaries of a free tertiary education, which still happens in some places. Should we be taking advantage of, say, the Australian government which offers free postgraduate research degrees to both domestic and overseas students, quite a few of whom will end up in New Zealand? Or the Prime Minister himself, who appears to have taken his B Com, somewhat more subsidised when he did it than it would be now, to enrich the lives of Chicagoans. Was it an attack of conscience that brought him back home? It might be a useful exercise to see whether the number of graduates who leave are outnumbered by graduates from elsewhere and who haven't cost our government a cent. The proposed sanctions on these unpatriotic recalcitrants, who are not all racking up fortunes in the City of London or corporate America, are truly onerous, not to say vindictive, including 'adding to student loan interest, restricting Kiwisaver withdrawals, and making it easier for police to issue arrest warrants for serious, sustained loan defaults.' Given the exponential effect of compounding interest and IRD penalties the propensity for once manageable sums to turn themselves into tens of thousands of dollars, or more, the net result is that these graduates are lost forever, not only to our economy, but possibly to their families. Political reaction to this heavy-handedness is predictable, especially from the Labour Party. Shanan Halbert, Labour's spokesman, acknowledges the hardship students face with constant fee increases and abolition of the limited fees free scheme. And, as he says, ``Of course people should repay what they owe.'' He continues: 'But the bigger question is why so many young New Zealanders are struggling to get ahead and choosing to build their futures overseas.' It is a bigger question, but it doesn't address tertiary education and in particular its commodification. People should indeed repay what they owe, but the question here is, should they owe it in the first place? Mr Halbert predictably fails to ask this big question because he appears to assume that the appropriate relationship between a university and a student is much the same as between the student and whatever commercial establishments he spends money at. It would help if decision makers reminded themselves that education is a continuum from primary to tertiary and every society we can think of appears to consider it rather important. At primary and secondary levels education as a commercial transaction is generally at the margins and governments are prepared to spend money on this obvious public good. They even make it compulsory. Why tertiary education should be regarded differently is unclear. The common argument for tertiary fees is that qualifications bring greater financial rewards. This may be the case but it is not inevitable. In effect fees are a tax on potential income; perhaps it would make more sense to tax higher incomes and accumulated wealth when they happen. Tertiary education clearly has a more direct contribution to the economies of both the country and the individuals who benefit from it than its precursors. The economic imperative is important, but not its only function. The present narrow focus on economic function distorts the whole purpose of education at this level, creating false relationships between the institutions, teachers and researchers, and students. This distortion is especially clear in the current government's appalling misunderstanding of science and how it works and the apparent relegation of the humanities to the status of hobbies. It is also reflected in the unfortunate commercial model that saddles graduates with debt and an extra tax. Harry Love is an honorary fellow in the Classics department at the University of Otago.