The burgeoning level of student loan debt is a ticking time bomb, the Labour Party says.
About 720,000 people have student loans, according to official figures. Photo: Unknown
Student groups around the country are calling for action as student loan debt reaches $15 billion.
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Official figures show more than 720,000 people now have student loans.
Union of Students Associations president, Linsey Higgins, said the level of debt was having a big impact on society because it limited the choices students could make later in life.
"For students, it's the implications around really big topics such as home ownership, retirement savings, the decision to have a family or study at a higher level. These options are being removed from students because of their debt."
Tertiary education should be free, she said.
During Parliamentary question time Labour leader Andrew Little put that to Prime Minister John Key.
"Does he even accept that forcing young people into $15 billion of student debt creates a barrier to study and puts off other life opportunities like owning your own home?"
Mr Key took issue with Mr Little's premise that students were forced to take loans.
"People do take student loans and they take them because they know on average if they have an undergraduate degree they'll earn 46 percent more on average after five years, that's a very sensible investment."
Mr Little then put a proposition to Mr Key.
"Will he come with me this afternoon, hand-in-hand if necessary, to Massey University and explain why he wants to tax cuts for the wealthy instead of reducing the $15 billion student loan burden."
Mr Key was quick to respond.
"Well if the member will come on TV tonight and say he's going to vote for the new New Zealand flag, I'll come hand-in-hand with him to Massey University for sure."
Mr Little used his next question to promote Labour's policy of three years free tertiary education.
"When can we expect him to adopt this as National Party policy given his adoption of other policies he hated, like KiwiSaver, interest free student loans and Working for Families?"
Mr Key replied he accepted that it was true National had continued with policies such as interest free student loans.
"But actually [the Tertiary Education Minister] Steven Joyce has dramatically improved that because under Labour student debt grew at 11.6 percent, under National it only grows at 4.2 percent."
Students who remained in New Zealand paid off their students loans on average in fewer than six years and the median student loan balance was currently just over $14,000, Mr Key said.