3 Jun 2015

Loan cap catches out medical students

9:20 am on 3 June 2015

Alex Hedley wants to finish his medical degree, but unless he can fork out over $15,000 for his final year, he won’t be able to.


Alex Hedley

Alex Hedley Photo: Tom Furley


The 24-year-old student and vice president of the NZ Medical Students’ Association (NZMSA) is the first in his family to attend university. He's also one of hundreds of undergraduates who will have to pay upfront for their last year of training because of a law restricting student loan borrowing to seven years.

While most medical degrees take six years to complete, each year about 30 per cent of the class is selected by the universities from a pool of applicants with a previous degree.

By the time those students get to the last years of their medical degrees, they’ll be over the cap and faced with shelling out $15,000 in the final year, in some cases $30,000 for the last two years.

“It shouldn’t be expected that students in New Zealand have to come up with that amount of money, because we’re trying to live in a fair and equal society and that doesn’t sound fair and equal to me,” Alex said.

“It is gutting to know that after I’ve spent so much time and effort doing something, it can get stripped away from a policy level.”

The seven-year borrowing cap was announced by the National Government in 2011 and back-dated to all student who started studying from 2010.

The first group of students will be affected at the end of this year and a larger cohort, about 150, will be affected every November thereafter.

An online petition started by the NZMSA a week ago calling for the removal of the student loan cap for medical students has collected more than 19,200 signatures.

Like many others who gained post-graduate entry to medical school, Alex studies full time and doesn’t have the money saved to pay his final years fee next November.

“It’s embarrassing to go back to your parents in your late-20s and ask for money,” he said.

“My parents are wanting to reach their retirement and I’m taking away money that they could use. They’ve worked hard all their lives and now, frankly, a stupid policy decision is taking away their opportunities to enjoy their retirement.”

While his parents will lend him the money, Alex said not every family can afford to do same, leaving some students unable to finish their degrees.

In an NZMSA survey of over 400 second- and third-year medical students, about 47 per cent said they don’t know how they’d fund their studies without a student loan.

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Photo: Source: NZMSA

About 20 per cent said they knew someone who’d been put off studying medicine because of the cap.

Last year, Tertiary Education Minister Steven Joyce suggested students get bank loans, but an Official Information Act request filed by Alex showed the minister had received advice from banks saying they wouldn't approve them.

“We’re not earning any money so we can’t provide security for such big loans,” Alex said.

Joyce said officials would monitor the impact of the policy and he’d meet with NZMSA again if new data came to hand.

“It's important that interest-free student loans are fair to both students and taxpayers who bear 40 per cent of the cost of every loan,” he said.

“Medical students earn the highest income of any student once they graduate."

Alex said Joyce’s argument is “completely invalid” since the policy is stopping students from graduating at all.

“You can earn as much as you want after your graduate, it’s not going to change the fact that you don’t have enough money to finish your degree.”