Student loans are contributing to growing inequality, says TEU national secretary Sharn Riggs.
Statistics New Zealand released data this week showing that the top ten percent of households own well over half of the country’s total wealth.
The data shows extreme inequality between ethnicities. People of European ethnicity had a median net worth of $114,000, compared with $23,000 for people of Māori ethnicity, $12,000 for Pacific people, and $33,000 for the Asian ethnic group.
Riggs says part of the cause for this destabilising inequality is student loans.
Young people (aged 15–24) had the lowest individual median net worth of any age group – just $1,000. The most common debt for young people is education loans.
Riggs says student loans place huge financial pressure on people on low incomes.
“It is much harder for non-Pākehā people to grow their wealth during their life when they are saddled with student debts that cut away such a huge proportion of their current wealth.
“The high cost of studying also means it is harder for Māori and Pasifika people to get into tertiary education.”
Median education loan liabilities are only one-tenth of Pākehā people’s median assets, but they are a quarter of Māori people’s assets and over a third of Pacific people’s assets (table 7.01).
The data shows that the households with the smallest median net worth have the largest median education loans (table 2.02). These loans make up nearly a quarter of their total debt (table 2.03).
Over a third of households within the poorest quintile of net worth have education loans, whereas less than a tenth of households in the wealthiest quintile have education debt (table 2.04).
Riggs says New Zealand has to cut the cost of education if it wants to restore a more equal and balanced society.