Incentives matter: student file

Incentive matter for students along with everybody else. This from an article in the National Business Review, National's student loan plan doesn’t add up by Ben Thomas. When discussing the current government's interest-free loan policy Thomas writes,

New student loan data shows that New Zealanders in tertiary education are most certainly rational economic actors, even if it doesn't look like it when they’re covered in beer and vomit and setting fires to cars in Dunedin.

Presciently, my and David Young's ‘Hive Mentality’ column was written about student loan policy before the release yesterday showing that a record number of students borrowed under the scheme in 2006. That was, of course, the first year after the government’s interest-free loan policy helped them win the 2005 election.

167,400 students took out loans in 2006, an 8 per cent increase in the numbers from 2005. That’s despite the number of those actually enrolled in tertiary study fell by 3 per cent in the same period.