Wednesday, January 02, 2008

Gaming? Nah its Entrepreneurism!

This report in
Dont blame the students for borrowing Govt's money interest free and reinvesting the money elsewhere to earn profit. Anyone who have half a brain would.
After all profit and entrepreneurism is the basis of capitalist society.
Go for it guys!
After all your elders has been doing it for years, borrowing money at low interest rate, and investing them somewhere (like buying houses, businesses etc) making the money work and earn tidy profit.
Students 'gaming' with loans
By Rebecca Todd - The Press | Wednesday, 02 January 2008

The Government's interest-free student loan scheme is encouraging "gaming", with students borrowing unecessary amounts so they can reinvest the money, says a National MP.

His claims come as the Government's recently released student loan scheme annual report shows the total amount owed leapt 25 per cent in two years, to $9.4 billion in 2007.

Voluntary repayments plummeted more than 40% to $142 million, as did the number of loans fully repaid in a year, dropping by 10,000.

The number of first-time borrowers rose 17% in the last year with 82% of full-time students now taking out a loan.

National's tertiary education spokesman, Paul Hutchison, said taxpayers should be concerned about the high number of people taking up loans and the slip in repayments.

He had heard many stories of students "gaming the system", by borrowing money they did not need for studying and investing it in banks.

"New Zealand taxpayers have got to be very worried about gaming of the system when there's an interest-free element," he said.

"The whole point is, why pay it back when it's interest-free?"

Hutchison said there should be incentives in the scheme to reward those who completed courses in reasonable time and did well.

He was also looking at the Australian system which deducted money for students who paid back their loans faster.

The party had not yet made a decision on whether it would keep the interest-free loans policy introduced by Labour in 2006.

Hutchison said National Party leader John Key would make an announcement.

Canterbury University masters student Sam Anderson said he had heard of students investing money from student loans and keeping the interest.

"That's the truth, but it's always happened in the past. I think more people are likely to do it now though."

Student loans were made interest-free last April, but previously all interest on loans while students were still studying was written off at the end of the year.

Anderson had not heard of anyone making big money off the scam as it took time to build up a large deposit.

"There's much easier ways to make money," he said.

More than $530m in interest was written off last year, compared with about $200m in 2004.

It is forecast that by 2015, the student loan portfolio will have grown to $16b and will rise to $21b by 2020.

Duty Minister David Parker said people using the interest-free loans to make money for themselves was "deplorable behaviour", but it was not widespread.

"In any system there will always be people who abuse it and they should be criticised, but it's not common."

Parker said the Government was happy with how the scheme was working. It had encouraged more people into tertiary education and reduced the average time people took to repay their loans, he said.

He also questioned whether National was thinking of reversing the policy.

New Zealand Union of Students Association (NZUSA) co-president Joey Randall said Hutchison's approach was "cynical and incorrect".

"We think this shows students are having to borrow more because fees are increasing and costs are increasing."

Students were already living on the edge with just $150 allowed for living costs a week -- a sum which had not changed over the past 15 years, he said.


Anonymous said...

Interesting post. I'm a budding entrepreneur, so this is very helpful. I'd love to buy a business, but having enough capital to support myself during the beginning would be great. I've been looking for businesses, but I haven't found any that truly interest me. Do you have any suggestions? Thanks

Anonymous said...


I suggest looking into any small business groups in your area. They should be able to help you, and it's always nice to network.

I also highly recommend checking out, which is an online global marketplace. You can invest in, buy, and sell a business there. There are other professional services, in case you need to, say, find a lender. There a bunch of different businesses, so it'll be good. Check it out and good luck!

nooryahaya said...

try currency trading. or stock trading. or trade on ebay.