The DomPost reports Thousands of Kiwis face Budget pay cut. Currently graduates lose ten cents in every dollar they earn over $19,084 to repay their student loan (I am one of these graduates) The government is set to increase this rate in the budget.

Mr Key would not be drawn on the new rate, but said it would raise "tens of millions of dollars".

Currently:

Figures supplied by Inland Revenue show that at the 10 per cent rate that applies now, $690.6million was received in student loan repayments in the year till June 30, 2011.

A one or two cent rise in the rate could pay back an extra seventy to one-hundred and forty million dollars.

Unfortunately some of the responses have been unable to keep things in perspective:

New Zealand Union of Students Associations president Pete Hodkinson said a lift in the repayment rate was a tax increase because it was taken straight out of pay, like PAYE.

Pete Hodkinson appears to be an idiot. My kiwisaver is also taken directly out of my pay, does he consider that a tax? Or how about the donations I make through payroll giving? Statistics show that graduates earn more than non-graduates and they should have to pay for their education which affords them this privilege. In times of economic uncertainty when we all have to tighten our belts there is no reason to exclude graduates.

Labour deputy leader Grant Robertson said the change would put more financial pressure on graduates. The rate should balance the need for loans to be paid off quickly with the need for graduates to meet their costs and be able to take out a mortgage. The increase put that at risk.

The financial pressure on graduates is tiny. Most graduates are single with no dependents and their biggest financial issue is buying shiny new toys. Graduates straight out of university cannot believe how much disposable income they have. There is little reason they cannot pay off their loans before taking out a mortgage. This is disappointing from Grant Robertson who I like.

A lot of the comments on Kiwiblog appear to focus on a number of factors.

1)Why are they not focusing on people overseas who are not making repayments? The government has been focusing on these people, reducing the repayment holiday, working with foreign governments to chase down people. Unfortunately these people are overseas and the government is limited in what they can do about it. I don't like a lot of the things this National Government is doing, but I can not fault them on this.

2)Who do students think pays for their interest free loans? I imagine most students don't spend a lot of time thinking about this question. But if they did they would probably reach the conclusions that it is taxpayers. Which in a few short years they will be and as university graduates earn more on average than non-graduates they pay more in tax on average as well.

Unfortunately the article also says:

Tertiary Education Minister Steven Joyce has also said changes would be made to student allowances. "We're really looking to make sure that we target the allowances to those in the early years of study and those families that can least afford it."

The change would not be dramatic, he said. The cost of allowances had risen to $600m a year, and the Government needed to curb that.

The parental income threshold for allowances was frozen this year and would probably be frozen for another three or four years. Loopholes in the definition of income would also be tightened.

I am in favour of a universal student allowance, although now is not the best time to implement it. However we should not be cutting the allowance from those who need it.