Pity the National Party. Forced to swallow interest free student loans before the election as one of their infamous ‘dead rats’, they’re now reduced in government to periodically whinging about it in the hope that the public will eventually let them have their way.
But John Key’s latest broadside, where he describes the $11 billion of student loan debt as a ‘disaster’, is closer to the mark than most on the left might think. The fact is we can’t just continue to pile on student debt at this rate. As No Right Turn argues:
This is an economic, social, and political timebomb. Economic, because as Key admits, the “debt” cannot be repaid (and therefore won’t be) – meaning that at some stage the government is going have to admit this and confront a large hole in its books. Social, because pervasive indebtedness among our best and brightest is forcing them overseas, to defer having children, and putting the kiwi dream of home ownership out of their reach. And political because those half-million debtors and their worried families are a constituency and a growing one, who will increasingly start agitating for their unrepayable debt to be forgiven. Reimposing interest on student loans won’t change that; instead it will just make matters worse (and as Key admits, result in the de-election of any government which tries).
Labour’s policy of interest free student loans was a humane and practical step to ameliorate the worst aspects of the loan scheme. But like their position on neoliberalism in general, with the loan scheme Labour’s horizons were limited to taking the hard edges off the problem without ever tackling it directly.
The real problem here isn’t who pays off the interest on student debt, it’s that we have a system that causes such debt to be created in the first place. Therefore the solution to the student debt problem isn’t to tighten access to loans or to make students pay more, it’s to stop forcing students to borrow in order to live, and to cut or even abolish tuition fees.
It’s not like we don’t have the money. It’s a simple matter of political priorities. Once again, No Right Turn hits the nail on the head:
The scheme exists because the government in the 90’s chose to underfund education to pay for tax cuts for the rich. And that is why it continues to exist today. In this Budget, the government gave away enough money to fully fund student fees in tax cuts for the rich. Priorities, I guess – John Key would rather continue to force students to borrow to eat than forgo the opportunity to enrich himself and his rich mates.
It’s time Labour moved on from simply defending interest-free student loans as if the policy was the final word from the left on this issue. Let’s admit what we all know and agree that the loan scheme is in fact a disaster. Only then will we be able to start tackling the real cause of the problem.