Maaan - I've been waiting to whinge about this for ages.
I have a student loan debt of $45,000 and growing steadily. I've completed five years of study and have a degree and a certificate. I was happy to borrow to pay for it, after all, eduaction providers can't really do it out of the goodness of their heart can they.
BUT, since I have finshed studying, got a job and started paying regular amounts onto my debt it has grown by $1600 in the last six months. Despite the fact that I have given them $800. I got no problems with paying back what I owe, but I absolutely resent paying one of the highest interest rates in the country - higher than it needs to be to keep with inflation and higher than mortgages. I'm very curious to know what percentage of that $7 billion figure is interest...
//"If half of your repayment obligation is less than the base interest calculated on your loan then the difference is your interest reduction."
I remember hearing the government made some changes to help people pay off their loans quicker. This system is much better for us than when I started paying off my loan.
I *think* it means this:
Student loan interest is made up of base interest (5.5%) and an adjustment for inflation (currently 1.5%). Your repayment for the year is dependent on your income - as you earn more, you're required to pay back more. OK, that's the easy bit.
So - calculate your required repayment for the year. Let's say it's $1500.
Calculate the base interest on your loan - for a $45,000 loan it'll be $2475.
Interest adjustment for a $45,000 loan at the moment is $675.
If half of your required repayment is less than the base interest - 1500 / 2 = 750 - so, yes...
then the difference is written off. OR - the base interest is reduced to the amount of half your required repayment. That means that the rest of your required repayment - the other 750 in this case - goes to pay off the inflation adjustment (in the example, $675), plus capital (so you've just paid off $75 of your original loan).
The current interest rate is 7%, with base interest being 5.5%. Therefore 78.5% of the interest your paying is base interest (so from $1600 that is $1256). Assuming the $800 you paid is your minimum repayment obligation (ie, you're just paying the minimum you're supposed to), then you're interest write off is $1256 -$400 (half of the $800)=$856. Therefore, the net effect is that you paid off a grand total of $56 in the last six months. I think that's approximately right. It's a gorgeous piece of accountancy. blech.
I might mention also, that if you voluntarily increase the amount you're paying off - if you can spare an extra $500 a year, it doesn't affect the interest reduction, so it'll go straight into paying off your capital. If your loan concerns you (I just say that because a lot of people aren't especially worried about theirs), then it's a really good idea.
However, if you are good at saving then developing other investments is a better long-term strategy than trying to pay off your loan faster. The interest on your loan (if you end up earning enough to loose the interest write-off) is usually less than mortage interest rates, and it is an especially good deal while you are getting the interest write-off. Most financial planners would argue that you shouldn't try to reduce your debt until the last 10 years prior to retirement (assuming that you are saving in other ways).
Yeah i did think about doing that..it's a very sensible thing to do. But i figured that since I was going to have to pay at least $75 a week (which is almost a quarter of my income) just to keep up that I may as well just wait until someone recognises my brilliance and starts paying me copious amounts of money.
But I do have regular struggles (which I never actually resolve) in my head about whether I should spend the next five years dedicated to paying off the loan, or if I should be saving for some adventures in other parts of the world. I inevitably do neither and instead buy pretty things to make myself feel better.
I stubbornly continue to blame the government for my worries though.
hey - turns out I am eligible for an interest reduction - sweeeeeet! It's only about $100, but it makes the whole thing seem less unfair.
And IRD reckon they were going to tell me about is eventually, sure.
Thanks for bringing it to my attention anyway. I knew I sppent time on these forums for a reason...
And out of interest, how long was your hold time? My record is 45 minutes, luckily I had a phone with speaker option so I didn't have to put my neck out holding it against my shoulder while I got on with my life
much to my surprise, not long at all. one can waste a fair amount of ones life in phone queues though, huh.
they reckon they would have told me about it in July when the personal tax return stuff came out...I'm not convinced though. And i reckon if you think your eligible just call them and ask. no harm. ...except maybe an hour or two out of your life..
About $40K I think, although I stopped opening the letters a while ago. Throughout my 5 years of study (1 certificate, 1 degree) I was not eligible for a student allowance at all because my parents earned about $2.50 more than fuck all. In my fifth year big H-dogg got in and very generously gave me about $23 per week student allowance but I still had to borrow the rest of my living expenses ($127 per week). For my first 4 years of study the interest rate was floating between about 7% and 8.6%, and there was no such thing as an interest write off resulting in over $1000 being added to my total bill during my first 12 months of student debt. So by age 18 I was already about $10K in debt and unable to get any assistance. It was comforting as my debt grew steadily however, to watch my 33 yr old flatmate who had been on the dole for 10 years sitting on the couch smoking pot every day while taking the government for everything he could get. Seems fair that one person could offer nothing to the country and be supported for it, while thousands of others can work their asses off to better themselves and be punished with crippling debt.
I have never had any problem with paying to learn, study is just another service that we should have to pay for. I do have a problem with their student allowance criteria though, which is just completely ridiculous. Most of us do not have parents who can support us throughout 4+ years of tertiary education or believe they should even be asked to. Surely they must see that this system is as stupid as a Don Brash speech?
//study is just another service that we should have to pay for
Study is not just another service that we should have to pay for. Studying is not the same as a haircut. Learning things enables people to make a different contribution to society, adding some 'public good' (although you as a person do benefit as well, so perhaps the current fraction of the actual cost of learning is somewhat justified). Getting a haircut doesn't contribute to the public good (unless of course it's a bye-bye-mullet-cut).
However, it does seem rather unjust that an out-of-town student ends up having their learning cost more than someone on the dole, or someone who can live with their parents for free (the basic argument for a universal allowance). And mostly working while you study is counterproductive (unless you're lucky enough to work in a library or somewhere giving you useful skills for later life).
Yeah but... Our fees are relatively low in comparison to many countries and in all fairness an individuals education is much more personally beneficial than socially. Higher education in many instances dictates how much a person will or can earn and therefore it seems reasonable that we should have to pay some sort of fee for making this "investment in our future". Personally, I feel that for the fees I paid for my education I got a pretty good deal, although I do understand what you are saying.
Thousands of 18-yr-olds having to borrow $150 per week at around 40 weeks per year for an average of 4 years however is completely unjustifiable. I would like the politicians to explain how it benefits anyone to have our educated young people leaving the country because they have debts that cannot be repaid on the average NZ wage.
//Our fees are relatively low in comparison to many countries
Perhaps compared to the US, but not to Australia, Britain, and most of Europe.
//Higher education in many instances dictates how much a person will or can earn
I think higher education tends to lock people into an income bracket, and I mean that in both a positive and negative sense. Yes, education might be a good predictor of above average income, but I think it's a lousy predictor of real wealth. If you want to make money, going to university is a bad option. Of my age group, the richest are those who avoided tertiary education (including the millionaires), those on middle-incomes went to university, and those who didn't go to university are somewhere between middle and average income. Claiming that a degree is an "investment in your future" is merely political propaganda, created to justify why you should have to pay for your education.
It's true that those that don't go to university usually end up better off financially. See LugHead post below. And my little brother can attest to it as well. He flagged university all together, got a job and now at the tender age of 21 as a deposit for a house.
But whether or not you end up earning more or not is probably quite irelevant. Because it's really do to with what we want out of life isn't it?
Where my bro's sole life aim is to make as much money as possible, mine is probably to die having fulfilled some kind of social purpose - university was conducive to that. And damned if I was going to let the cost of it stop me.
Ha ha ha ha Fool's!!
Learn a trade and earn while you learn, at the end of your time you will have a job your already highly skilled in with the experience and qualifications to back it up, but most importantly you will not be in debt. in fact you will actualy have your very own money
I've frequently thought about doing a trade course to complement my degree, but considering i haven't graduated yet, and still have another 11 months till i graduate i figure i'm best to spend all my time concerntrating on my major and getting a good paying job to pay off my debt.
Well I've brilliantly timed my degree so I'll be finished when I'm 24 and 10 months old, therefore never qualifying for an allowance of any sort. But man my loan freaks me out - I think it's about 8 grand at the moment, maybe more, but once I get a job I think I'll move back in with my parents, buy nothing, spend no money for a year and hopefully pay it off.
But man, I am very hard to stress out, but my damn loan is probably the one and only thing that can do it ...
I pretend I don't have a loan and that makes me happy...
... Happier.
Its depressing to know that I'll be paying close to 20 something grand more by the time I finish paying the mofo'. Most of it is from that God awful living costs and fuck the criteria to meet student allowance. The only way I could qualify for student allowance was for me and my family to have total relationship breakdown and the only communication was through supervised meetings through the court system.
Fuck man, if that was the case the last thing I should be doing is fucking studying.
The criteria to meet for a student allowance is pretty ridiculous- especially considering all bar very few of my friends fund their own way through tertiary study- their parents can't afford the fees, nor the cost of maintaining their lifestyles, but they aren't eligible for allowances. Its pretty hard when they work every night of the week in some low paid waitress job just to pay rent when they should be studying.
I was luck enough to be eligible for an allowance for the first 2 and a half years of study (thanks to mum and dad setting up their own business) but now i'm not, because I un-enrolled from half a year of study last year because of circumstances beyond my control -it was the uni's fault but getting them to admit to it on paper to let me have an allowance this year -when i'd transfered somewhere else was impossible.
therefore in less than 5 months i have gained a healthy $2400 in living costs. and in that, i cover rent, power, phone and my weekly bus fare. -thankfully i have a boyfriend who pays for food, otherwise i wouldn't be eating because $150 a week is barely enough to live. I pay my weekly course related cost from a cleaning job.
Just thought I'd say that, although I felt like the Government didn't want to help while I was at Auckland Uni (my father, who lives in Perth, earned too much for an allowance...), they have been very helpful this year.
I now live in Woodville with my wife and our first daughter (7 months). My wife does not work full-time. My student allowance (plus the small amount I earn and a few days work from my wife) allows us to live quite comfortably.
I am lucky that I haven't had to get a loan so far thanks to family, that takes a weight of my shoulders. We don't have room for large saving so paying off a loan (or other large sudden debts... :( ) is a worrying prospect
Delicious
Digg
Reddit
Facebook
Google
Technorati
Maaan - I've been waiting to whinge ...
Maaan - I've been waiting to whinge about this for ages.
I have a student loan debt of $45,000 and growing steadily. I've completed five years of study and have a degree and a certificate. I was happy to borrow to pay for it, after all, eduaction providers can't really do it out of the goodness of their heart can they.
BUT, since I have finshed studying, got a job and started paying regular amounts onto my debt it has grown by $1600 in the last six months. Despite the fact that I have given them $800. I got no problems with paying back what I owe, but I absolutely resent paying one of the highest interest rates in the country - higher than it needs to be to keep with inflation and higher than mortgages. I'm very curious to know what percentage of that $7 billion figure is interest...
[ http://daylightfuckinrobbery.com ]
will you be eligible for a tax ...
will you be eligible for a tax write-off?
I was when I was studying, but not now ...
I was when I was studying, but not now that I'm working.
Unless there's some other tax write -off...?
typically easy-to-follow IRD ...
typically easy-to-follow IRD speak...
"If half of your repayment obligation is less than the base interest calculated on your loan then the difference is your interest reduction."
So, uh, yes? Any accountants out there?
[ external link ]
I don't quite understand that, but ...
I don't quite understand that, but I'll investigate (call IRD and harass an innocent call centre employee), thanks.
//"If half of your repayment obligation ...
//"If half of your repayment obligation is less than the base interest calculated on your loan then the difference is your interest reduction."
I remember hearing the government made some changes to help people pay off their loans quicker. This system is much better for us than when I started paying off my loan.
I *think* it means this:
Student loan interest is made up of base interest (5.5%) and an adjustment for inflation (currently 1.5%). Your repayment for the year is dependent on your income - as you earn more, you're required to pay back more. OK, that's the easy bit.
So - calculate your required repayment for the year. Let's say it's $1500.
Calculate the base interest on your loan - for a $45,000 loan it'll be $2475.
Interest adjustment for a $45,000 loan at the moment is $675.
If half of your required repayment is less than the base interest - 1500 / 2 = 750 - so, yes...
then the difference is written off. OR - the base interest is reduced to the amount of half your required repayment. That means that the rest of your required repayment - the other 750 in this case - goes to pay off the inflation adjustment (in the example, $675), plus capital (so you've just paid off $75 of your original loan).
The current interest rate is 7%, with ...
The current interest rate is 7%, with base interest being 5.5%. Therefore 78.5% of the interest your paying is base interest (so from $1600 that is $1256). Assuming the $800 you paid is your minimum repayment obligation (ie, you're just paying the minimum you're supposed to), then you're interest write off is $1256 -$400 (half of the $800)=$856. Therefore, the net effect is that you paid off a grand total of $56 in the last six months. I think that's approximately right. It's a gorgeous piece of accountancy. blech.
I might mention also, that if you ...
I might mention also, that if you voluntarily increase the amount you're paying off - if you can spare an extra $500 a year, it doesn't affect the interest reduction, so it'll go straight into paying off your capital. If your loan concerns you (I just say that because a lot of people aren't especially worried about theirs), then it's a really good idea.
However, if you are good at saving then ...
However, if you are good at saving then developing other investments is a better long-term strategy than trying to pay off your loan faster. The interest on your loan (if you end up earning enough to loose the interest write-off) is usually less than mortage interest rates, and it is an especially good deal while you are getting the interest write-off. Most financial planners would argue that you shouldn't try to reduce your debt until the last 10 years prior to retirement (assuming that you are saving in other ways).
Yeah i did think about doing ...
Yeah i did think about doing that..it's a very sensible thing to do. But i figured that since I was going to have to pay at least $75 a week (which is almost a quarter of my income) just to keep up that I may as well just wait until someone recognises my brilliance and starts paying me copious amounts of money.
But I do have regular struggles (which I never actually resolve) in my head about whether I should spend the next five years dedicated to paying off the loan, or if I should be saving for some adventures in other parts of the world. I inevitably do neither and instead buy pretty things to make myself feel better.
I stubbornly continue to blame the government for my worries though.
hey - turns out I am eligible for an ...
hey - turns out I am eligible for an interest reduction - sweeeeeet! It's only about $100, but it makes the whole thing seem less unfair.
And IRD reckon they were going to tell me about is eventually, sure.
Thanks for bringing it to my attention anyway. I knew I sppent time on these forums for a reason...
did you have to call IRD to find out? ...
did you have to call IRD to find out?
And out of interest, how long was your hold time? My record is 45 minutes, luckily I had a phone with speaker option so I didn't have to put my neck out holding it against my shoulder while I got on with my life
that was a reply to heather. lime ...
that was a reply to heather.
lime green - you are far too sensible for your own good
much to my surprise, not long at all. ...
much to my surprise, not long at all. one can waste a fair amount of ones life in phone queues though, huh.
they reckon they would have told me about it in July when the personal tax return stuff came out...I'm not convinced though. And i reckon if you think your eligible just call them and ask. no harm. ...except maybe an hour or two out of your life..
About $40K I think, although I stopped ...
About $40K I think, although I stopped opening the letters a while ago. Throughout my 5 years of study (1 certificate, 1 degree) I was not eligible for a student allowance at all because my parents earned about $2.50 more than fuck all. In my fifth year big H-dogg got in and very generously gave me about $23 per week student allowance but I still had to borrow the rest of my living expenses ($127 per week). For my first 4 years of study the interest rate was floating between about 7% and 8.6%, and there was no such thing as an interest write off resulting in over $1000 being added to my total bill during my first 12 months of student debt. So by age 18 I was already about $10K in debt and unable to get any assistance. It was comforting as my debt grew steadily however, to watch my 33 yr old flatmate who had been on the dole for 10 years sitting on the couch smoking pot every day while taking the government for everything he could get. Seems fair that one person could offer nothing to the country and be supported for it, while thousands of others can work their asses off to better themselves and be punished with crippling debt.
I have never had any problem with paying to learn, study is just another service that we should have to pay for. I do have a problem with their student allowance criteria though, which is just completely ridiculous. Most of us do not have parents who can support us throughout 4+ years of tertiary education or believe they should even be asked to. Surely they must see that this system is as stupid as a Don Brash speech?
//study is just another service that we ...
//study is just another service that we should have to pay for
Study is not just another service that we should have to pay for. Studying is not the same as a haircut. Learning things enables people to make a different contribution to society, adding some 'public good' (although you as a person do benefit as well, so perhaps the current fraction of the actual cost of learning is somewhat justified). Getting a haircut doesn't contribute to the public good (unless of course it's a bye-bye-mullet-cut).
However, it does seem rather unjust that an out-of-town student ends up having their learning cost more than someone on the dole, or someone who can live with their parents for free (the basic argument for a universal allowance). And mostly working while you study is counterproductive (unless you're lucky enough to work in a library or somewhere giving you useful skills for later life).
Yeah but... Our fees are relatively low ...
Yeah but... Our fees are relatively low in comparison to many countries and in all fairness an individuals education is much more personally beneficial than socially. Higher education in many instances dictates how much a person will or can earn and therefore it seems reasonable that we should have to pay some sort of fee for making this "investment in our future". Personally, I feel that for the fees I paid for my education I got a pretty good deal, although I do understand what you are saying.
Thousands of 18-yr-olds having to borrow $150 per week at around 40 weeks per year for an average of 4 years however is completely unjustifiable. I would like the politicians to explain how it benefits anyone to have our educated young people leaving the country because they have debts that cannot be repaid on the average NZ wage.
//Our fees are relatively low in ...
//Our fees are relatively low in comparison to many countries
Perhaps compared to the US, but not to Australia, Britain, and most of Europe.
//Higher education in many instances dictates how much a person will or can earn
I think higher education tends to lock people into an income bracket, and I mean that in both a positive and negative sense. Yes, education might be a good predictor of above average income, but I think it's a lousy predictor of real wealth. If you want to make money, going to university is a bad option. Of my age group, the richest are those who avoided tertiary education (including the millionaires), those on middle-incomes went to university, and those who didn't go to university are somewhere between middle and average income. Claiming that a degree is an "investment in your future" is merely political propaganda, created to justify why you should have to pay for your education.
It's true that those that don't go to ...
It's true that those that don't go to university usually end up better off financially. See LugHead post below. And my little brother can attest to it as well. He flagged university all together, got a job and now at the tender age of 21 as a deposit for a house.
But whether or not you end up earning more or not is probably quite irelevant. Because it's really do to with what we want out of life isn't it?
Where my bro's sole life aim is to make as much money as possible, mine is probably to die having fulfilled some kind of social purpose - university was conducive to that. And damned if I was going to let the cost of it stop me.
some people would argue that making as ...
some people would argue that making as much money as possible could fulfil a social purpose. i intend to do both
Ha ha ha ha Fool's!! Learn a trade ...
Ha ha ha ha Fool's!!
Learn a trade and earn while you learn, at the end of your time you will have a job your already highly skilled in with the experience and qualifications to back it up, but most importantly you will not be in debt. in fact you will actualy have your very own money
//Fool's!! Learn a trade Thanks, ...
//Fool's!!
Learn a trade
Thanks, but I choose literacy over cash.
I've frequently thought about doing a ...
I've frequently thought about doing a trade course to complement my degree, but considering i haven't graduated yet, and still have another 11 months till i graduate i figure i'm best to spend all my time concerntrating on my major and getting a good paying job to pay off my debt.
Well I've brilliantly timed my degree ...
Well I've brilliantly timed my degree so I'll be finished when I'm 24 and 10 months old, therefore never qualifying for an allowance of any sort. But man my loan freaks me out - I think it's about 8 grand at the moment, maybe more, but once I get a job I think I'll move back in with my parents, buy nothing, spend no money for a year and hopefully pay it off.
But man, I am very hard to stress out, but my damn loan is probably the one and only thing that can do it ...
I pretend I don't have a loan and that ...
I pretend I don't have a loan and that makes me happy...
... Happier.
Its depressing to know that I'll be paying close to 20 something grand more by the time I finish paying the mofo'. Most of it is from that God awful living costs and fuck the criteria to meet student allowance. The only way I could qualify for student allowance was for me and my family to have total relationship breakdown and the only communication was through supervised meetings through the court system.
Fuck man, if that was the case the last thing I should be doing is fucking studying.
The criteria to meet for a student ...
The criteria to meet for a student allowance is pretty ridiculous- especially considering all bar very few of my friends fund their own way through tertiary study- their parents can't afford the fees, nor the cost of maintaining their lifestyles, but they aren't eligible for allowances. Its pretty hard when they work every night of the week in some low paid waitress job just to pay rent when they should be studying.
I was luck enough to be eligible for an allowance for the first 2 and a half years of study (thanks to mum and dad setting up their own business) but now i'm not, because I un-enrolled from half a year of study last year because of circumstances beyond my control -it was the uni's fault but getting them to admit to it on paper to let me have an allowance this year -when i'd transfered somewhere else was impossible.
therefore in less than 5 months i have gained a healthy $2400 in living costs. and in that, i cover rent, power, phone and my weekly bus fare. -thankfully i have a boyfriend who pays for food, otherwise i wouldn't be eating because $150 a week is barely enough to live. I pay my weekly course related cost from a cleaning job.
as i write i owe $47,532.25 Stupid ...
as i write i owe $47,532.25
Stupid National Party, Stupid National Party.
Just thought I'd say that, although I ...
Just thought I'd say that, although I felt like the Government didn't want to help while I was at Auckland Uni (my father, who lives in Perth, earned too much for an allowance...), they have been very helpful this year.
I now live in Woodville with my wife and our first daughter (7 months). My wife does not work full-time. My student allowance (plus the small amount I earn and a few days work from my wife) allows us to live quite comfortably.
I am lucky that I haven't had to get a loan so far thanks to family, that takes a weight of my shoulders. We don't have room for large saving so paying off a loan (or other large sudden debts... :( ) is a worrying prospect