Eric Crampton: Economist says interest should be reinstated for student loans as zero percent scheme no longer works

Belief that interest should be reinstated on student loans to allow learners to borrow more while studying.

One economist says because the Government is subsidising the interest costs of student borrowing, it's up against lending constraints.

NZ Initiative's Eric Crampton told Heather du Plessis-Allan the zero-percent interest scheme was intended enable greater access to study, but no longer achieves that.

“But because students can't sufficiently borrow against a future income, because the Government just can't let everybody borrow as much as they would want to borrow at zero percent, it just shuts people out.”

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