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@Rembrandt said in Student Loans:
What I'd love to see is some sort of financial literacy being covered in highschool so at least 17 year olds without decent guidance might have a fighting chance...that's not to say I would have listened at the time but at least then I wouldn't have any sympathy now.
Holy crap, this! Compounding interest should be drilled into people's heads - the terms some folk sign up for absolutely bamboozle me.
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A little more balance from stuff nz
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@nzzp said in Student Loans:
@Rembrandt said in Student Loans:
What I'd love to see is some sort of financial literacy being covered in highschool so at least 17 year olds without decent guidance might have a fighting chance...that's not to say I would have listened at the time but at least then I wouldn't have any sympathy now.
Holy crap, this! Compounding interest should be drilled into people's heads - the terms some folk sign up for absolutely bamboozle me.
It’s not hard. If you don’t pay your loan, the interest gets added to it.
It’s a killer in a high interest environment, especially if you signed up to your loan in a low, and never really understood it.
The UK law is very good here in the disclosure which must be made under and financing deal. One thing to have a headline saying drive the new ford xxxx for 299 p/month. It’s another showing you the real interest is 13.5% and you’ll end up paying 30k in real cash for a 22k car.
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@chimoaus said in Student Loans:
Pretty sure Australia does not charge any interest if you go overseas, the debt waits for you. Catch is I think it grows with inflation.
Yes this is the case. It's not much of a catch though as for most between the ages of 18 and 40 a loan that only rises with inflation is going to be the cheapest money you can get. The system used to be great too because if you made voluntary contributions there was a 15-25% bonus.
About two years ago the Australian government changed the rules and demanded that Aussies overseas with HECS/HELP debt had to make payments on their worldwide taxable income once over the $50k treshold. Their ability to enforce that is obviously nil outside of those returning to Australia - but per an accountant mate of mine people have been picked off at the airport returning for this.
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@Bovidae said in Student Loans:
This piqued my interest:
In 2018, overdue student loan debt was $1.5 billion, with overseas-based borrowers owing 91 per cent of that.
Clearly those overseas-based people who are paying back their student loans are a very small minority.
What would be interesting is how many of those 91% want to return to NZ but their debt is so overwhelming they choose to ignore it. So instead of the scheme keeping talent in NZ it may actually be keeping it out.
You have to wonder why so many people are in this boat. As mentioned the 7% compounding interest and penalties cause the most issues. I think we were close to 8 or 9 grand a year in interest and penalties alone. Another issue for us was I forgot to update my overseas address with IRD so I never got any statements or updates. Yes this is my fault again but I am sure I am not alone.
Anyone have any idea what system would work better or what they could do to encourage payment?
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@chimoaus said in Student Loans:
@Bovidae said in Student Loans:
This piqued my interest:
In 2018, overdue student loan debt was $1.5 billion, with overseas-based borrowers owing 91 per cent of that.
Clearly those overseas-based people who are paying back their student loans are a very small minority.
What would be interesting is how many of those 91% want to return to NZ but their debt is so overwhelming they choose to ignore it. So instead of the scheme keeping talent in NZ it may actually be keeping it out.
Remember if they come back, it goes interest free. So probably not many
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Why aren’t any of you asking Andrew Little why he’s not agitating in Cabinet for a wind back of the entire scheme? When he was president of the NZUSA it was his main focus. At the time he was fundamentally against the concept of tertiary fees funded by loans. Now he’s very quiet on the matter.
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@MajorRage the finance industry in NZ has changed alot in the past 10-15 years, with more regulation, I expect (hope) the student loans today are regulated differently with disclosures and the like, whereas in the past, I expect it was more "how much you want?"
Many years later: "Oh, you didnt start paying it back, bummer dude!"
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My sister moved to Aus straight after graduation in about 2002, having completed a Master's. She's basically paid the minimum for the last 17-18 years and her loan balance is still sitting around $100k. Meanwhile, she took a year off work a couple of years ago to travel the world (well, she quit her job while on long service leave & kept travelling), and doesn't seem to be overly fussed. She still is thinking about coming back to NZ to work, but she's 43 now - if she does that, she'll be paying it off until she's at least 60 even if she gets a job that pays similarly to her Sydney gig. My aunt and I have both encouraged her to have a stronger crack at paying back the loan, but it doesn't seem to be getting through. Still, it's her funeral (as long as I don't have to pay for the casket).
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@Smudge said in Student Loans:
. My aunt and I have both encouraged her to have a stronger crack at paying back the loan, but it doesn't seem to be getting through. Still, it's her funeral (as long as I don't have to pay for the casket).
There's something to be said for ignoring it if it's interest free. Basically just an extra tax on income over a certain amount. I brought back a house deposit and a loan, rather than being broke and no loan. Made sense at the time
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@JC because there isn't a shitshow of a higher level of funding for tertiary study imo. Fees free (should have been free last year of undergrad, not 1st) has only gotten moderate uptake. But it may pick up steam this year.
I reckon tinkering with the existing system is a better approach, but how you balance things for overseas v NZ based, and defaulters in either camp is challenging. -
@nzzp my workplace offets super or student loan contributions. It was a no brainer to stick with minimum repayments on the loan and crank the super $$.
Ugh, knew a mate from college who chalked up a 50k loan then bailed on uni without finishing. If you took living costs, the 1k(ish) for books etc, then your fees it adds up real fast. I think she ended up off the grid in motueka so who knows how that turned out.
Still, enjoyed my boozy end of first year hol in Fiji though. Lol my dad also got me to re-carpet the lounge via my loan as the rates were cheaper than the banks. Fair enough as I didn't have to pay rent 😁
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@nzzp said in Student Loans:
@Smudge said in Student Loans:
. My aunt and I have both encouraged her to have a stronger crack at paying back the loan, but it doesn't seem to be getting through. Still, it's her funeral (as long as I don't have to pay for the casket).
There's something to be said for ignoring it if it's interest free. Basically just an extra tax on income over a certain amount. I brought back a house deposit and a loan, rather than being broke and no loan. Made sense at the time
Oh for sure. But she's in Aus, so it's not.
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@Paekakboyz TBH, if those overseas showed a genuine ongoing commitment to paying back their loan, I would support the govt in lowering the rate or perhaps forgiving a certain amount of interest.
But those who are all 'WAH I took out a huge loan, haven't paid back a cent, won't talk to the IRD, ignored hoping it would go away and now I owe heaps and they will arrest me at the airport WAHHHHHHH' folk can all go eat shit.
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Yeah a glaring weakness of the scheme in my day was the lack of distinction between fees and expenses. Student fees are unavoidable. Expenses can be managed, but mostly, weren’t.
I’ve never forgiven the government for the clear holes in their Student allowance scheme. Nothing like watching you dairy farmers pals get picked up in a brand new SS whilst taking full allowance whilst your teacher parents pick you up in a 10 year old Corona when you get zero.
Then going to your other friends parents beachfront
Batch in pauanui for new years, who also collected full student allowance.That was my first real foray into establishment distrust.
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Student Loans