Student debt has topped $10 billion dollars according to the New Zealand Union of Students' Associations (NZUSA).
The student loan scheme was introduced in 1992 and now has over 700,000 New Zealanders on the books, with debt growing at a massive rate of $1 billion a year.
Government figures put the average debt for each student at $16,800. But NZUSA estimates that personal loans are closer to $28,800.
Co-president of NZUSA Liz Hawes said student loans are not sustainable. "The two drivers are high costs of tuition fees and lack of student support," she said.
She said NZUSA research puts living costs for students closer to $270 a week than the $150 they are able to get through a student loan. Students were being forced to find work or get other debt, she said.
"We have seen an increase of 32 percent in other lending including overdraft, personal loans and credit cards," she said.
The Government believes students are in a better position. Tertiary Education Minister Pete Hodgson said in a press release that abolishing interest on all student loans, capping tuition fees and increasing the parental income threshold for allowances is reducing pressure on students.
"Of course the total student debt continues to rise because, apart from inflation, more students are accessing education and more students are studying to a higher level," Mr Hodgson said.
Greens MP Metiria Turei said student debt was creating an unacceptable barrier to tertiary education.
The Greens want to make education more affordable by gradually reducing the income threshold; introducing a universal student allowance and imposing limits on what fees universities can charge.
"Our long term economic future is being threatened by this dire situation," Ms Turei said in a press release.
The Maori Party has called student debt a "mortgage" on New Zealand's future.
"'User pays' education has mortgaged our future as a nation," spokesperson for tertiary education Dr Pita Sharples said.
"We should be investing in our young people and students, not demanding down payment on their future contribution to society," he said.
Massey Albany Students Association President Brad Heap said students want a sensible level of student allowance.
"Wouldn't it make more sense to use some of the massive budget surplus towards properly subsidising the tertiary education sector rather than continuing with the failed policy of user pays?" he asked.
Mr Heap said rising student debt is unlikely to help New Zealand's skill shortage, with new graduates seeking employment in countries paying better wages.
"The flow-on effect will be graduates moving out into the market and passing on the cost of their education to the rest of the economy or worse, continuing the brain drain overseas," he said.
Feeds