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Tertiary Education Minister Steven Joyce revealed major changes to the student loan and allowance schemes in a pre-budget announcement on May 3. The changes will come as part of the national Budget, to be released on May 24.

From next year graduates will have to pay off their loans at 12%, rather than the current 10%, on any earnings over $19,084. National will also likely cancel its loan repayment incentive scheme, which offered a 10% discount on voluntary repayments.

The threshold for student allowance will be frozen at the current rate for the next four years and students will no longer be able to access the student allowance after four years of study.

Joyce justified the changes to the scheme, saying the government planned to rebalance spending away from supporting students and towards “the actual tertiary space.” The National government claims that these changes will reduce the current $11 billion owed by students by $250 million and save the government $60-$70 million per year.

The amendments have been universally panned by opposition parties and student groups. Labour Party tertiary education spokesman Grant Robertson claims the increase in the repayment rate will lead to an increase in the dreaded “brain drain” of New Zealand graduates. “Student loan repayment starts as soon as someone earns just over $19,000 a year. This is far lower than Australia where it does not begin until someone is earning around $48,000, and even then only at 4 per cent.”

Robertson also commented that the four-year limit to claiming the student allowance would limit post-graduate study (or a double degree) to the realm of the wealthy alone. “The government’s choice of graduates and students and their families as the target to cut costs is strange and wrong. We must view tertiary education as an investment. This government can choose different priorities – like not selling assets or taking on millions of dollars of consultants to restructure the public service. They don’t need to scapegoat people who are just trying to get ahead.”

Green Party student spokesperson Holly Walker expressed similar sentiments. “Graduates repaying student loans were set for a cut in income this budget that could wipe out large parts of the tax cuts they received last budget. John Key has blithely waved away concern about the impact of increased loan repayments saying the effect will be ‘fairly mild’ while, in the same breath, he’d rake in tens of millions of dollars from them.”

Joyce has rejected the opposition’s claims, arguing that the fact that loans remain interest free for graduates living in New Zealand will act as an incentive to stay in the country.

New Zealand Union of Students’ Associations Pete Hodkinson labelled the student loan cuts “short-sighted” with NZUSA particularly worried that less access to allowances will simply mean more debt. “If a student doesn’t have access to allowances, and their parents can’t support them, then they’ll have to borrow. That costs too. We can’t reduce debt and force students to borrow to live at the same time. It’s completely illogical.”

Otago University Students’ Association President Logan Edgar chimed in on the lambasting of National’s changes to the student loan scheme, shaking his head and saying sadly, “I really used to like those National party guys, but Jesus, they’re just starting to take the piss now aren’t they?”