This article was published on 19 May 2007. Some information may be out of date.


  • Four readers give diverse views on whether baby boomers or Generation Xers got a better deal on tertiary education, student loans, and affordability of houses.

QIm sick of the slagging off of baby boomers. Moaning about student loans is a cop-out.

As the oldest of five children of a country coalminer, my chances of a university education were zilch. It required earning enough part-time to support myself through university. Fair enough there weren’t fees, but working fulltime supporting myself away from my hometown was difficult, without doing it part time and studying as well.

Thirty-somethings have had access to student loans. How many tales have we heard about loans being used to fund overseas holidays and cars etc? How many are prepared to use hand-me-down furniture for years, pay cash for everything or go without, buy op-shop clothes, save for months to eat at a restaurant?

AI’m not fully convinced by your coalminer’s daughter argument. Many baby boomers paid their own way through university. See the next letter.

Still, most students in those days came from middle class or richer families. It does seem that access to loans has led to a wider range of people taking up tertiary study, and that’s great.

I think we boomers need to concede, though, that those who had to pay fees plus interest on their student loans — even while they were still studying — did have it tough. Nowadays, with interest-free loans plus the student allowances that were not there in boomer days, students are not necessarily worse off than the boomers were.

On the use of student loans for trips and so on, I’m sure it still happens. But it’s probably not as common since the rules were changed. Now, loans for fees go straight to the institution and students have to present quotes to get loans for course-related expenses.

Some students still borrow money they don’t need, because it’s interest-free and they can earn a return on the money elsewhere.

The ability to do that gives them an advantage over earlier generations. But many students aren’t in a position to do that. Besides, we’ve thrashed out that issue in this column before. Let’s not go there again.

QRe: baby boomers had it all. In my case, not quite. For family financial reasons I had to leave school and get a job at age 16.

When a person turned 21 the universities allowed entry to those who did not have University Entrance. At 21 I enrolled part-time and attended lectures at night after work.

Having attended secondary school for only three years, the step up to university studies was a difficult hurdle. Because of my type of admission, there were also university fees to pay.

The nights I did not attend lectures were for studying. Most weekends and my full fortnight’s annual leave were used for preparing for exams. No holidays for five years and little or no social life for five years while in my twenties was the price I paid for my university education. Would today’s student-loan moaners still want to swap places?

When I got married we bought a nice but very basic house. Most rooms had no floor coverings. We biked 8 km each way to and from work most days, had no television for 5 years and no fridge for the first eight months.

Our current good fortune is not luck but the result of hard work and knowing how to budget for only the necessities.

ASounds as if you deserve everything you have.

“No fridge” is an interesting one to add to our readers’ hardship list. These days that would be a challenge for almost all of us — of whatever generation.

And cycling to and from work is a good way to save not only on transport costs but also gym fees — provided the roads are safe enough.

QI started university in 1994, and I am part of a generation, labelled X, that I believe are getting a raw deal.

We were the first generation burdened with university fees and student loans. There was no chance to have ‘saved for college’ as the Americans do.

I have no problem with the concept of user pays. The issue I have with New Zealand’s system was the compounding interest whilst students were studying, and the above market interest rate charged (up to 9.0 per cent in 1995).

Both those injustices have been addressed, but not before thousands of my generation have paid over the odds for something every previous generation got free.

I graduated in 1999 with a sizable debt for any 23-year-old — $42,900, and I worked hard to repay that.

I would like to add that I don’t own a flat-screen television, I save for things and don’t use hire purchase, I even drive a car that screams, “Don’t hit me, I’m not insured!” But still I cannot afford a house in Auckland.

AI agree that it was unfair that university fees were introduced so suddenly. These days, some families save for their children’s tertiary education from when the kids are born, but back in the early 1990s there was no time for that.

But I’m not so sure about the unfairness of charging interest on loans while the student is studying. People with tertiary education do tend to make more money later in life. So the current interest-free system is a transfer of wealth from all taxpayers to people likely to end up on high incomes.

It’s also debatable whether the interest rate was — or still is for many who have gone overseas — above market rates. It is based on the government’s cost of borrowing plus an inflation allowance — using the preceding year’s inflation rate. When inflation was rising, the interest rate was quite low; when it was falling, the rate was relatively high.

Note, too, that there have always been some interest write-offs, depending on students’ circumstances.

Still, as I said above, there’s no denying students in your era had a tough run. Compared with your contemporaries who didn’t go to university, you probably had a fair deal, but compared with your parents and younger siblings, you didn’t.

Good on you for being careful with your money. You’re not the only Gen Xer who has written to say that. Generation generalisations (try saying that ten times fast!) are always dangerous.

I hope your car actually is insured, regardless of the message it sends.

QI totally agree that my generation should be severely admonished for bringing such bitter twits into the world like the GenXer in last week’s column.

I am a baby boomer — the product of parents who lived through a war and a depression.

Yes, GenXer, my education was free, but that was not my gain as much as my parents’. They didn’t have to pay for dentistry or hospitals or education for me, but I think they deserved to get a break from the hard times, worry and illness they had seen for so long.

We, on the other hand, who have “had it easy” have paid out for everything for our children, including university fees. We even had to pay GST on top, which is really unfair!

Did your parents not do this for you, GenXer? Shame on them! They could have afforded to, since they had it easy, and a free education.

We didn’t have to borrow for a student loan and so we have made sure that our children would not have to either. We are proud of them and their attitudes — handed down from five generations of hard working kiwis.

What Mary Holm does not point out is relativity. I built my first house when I was 30, using my skills (gained from my “free” education).

I paid out the around 7–10 times my annual salary in house capital costs. I had a second and third mortgage, at 15 per cent!

I went without carpet in some of the rooms, I had no furniture for a year and I worked every night after getting home from a demanding job to paint, tile and landscape.

The average salary for someone in the job I had then would now be at least $40,000, and they would have only an 8 or 9 per cent mortgage. They could easily buy a house for 7–10 times that — provided they were prepared to go without some of that expensive technology that we couldn’t afford then.

So GenXer, I agree — get on with it and quit moaning. You certainly won’t be contributing to my superannuation — I’ll be paying for that myself too!

Yes this is a broad generalisation of a GenXer — I’ll swap it for the one Mary Holm painted of me.

AReaders have been doing most of the painting, but never mind.

Your point about at least same baby boomers paying for their children’s education is a good one. That’s where all of this inter-generational arguing gets complicated. It could also be said, for example, that to the extent boomers had a great deal, Generation Xers are likely to inherit more.

One problem, of course, is that only some boomers will pay for their kids’ tertiary schooling or leave them money.

On the relativity thing, it might be true that your house cost the same, relative to incomes, as current houses. But that’s not typical. A couple of years ago, New Zealand house prices were the highest they have ever been, relative to incomes. And since then it has only got worse.

As for mortgage rates, as I said last week, boomers bought houses at a time of fast inflation. Interest rates were high, but our incomes rose fast and the value of our mortgages declined fast. We clearly had the better deal in that area.

A couple more points:

  • GST is not unfair — at least not in this context. If it weren’t there, we would just be paying higher income tax. And GST at least discourages spending — something I would think you would approve of.
  • Gen Xers will, in fact, contribute to your superannuation, assuming you get NZ Super. It is paid for out of current government income — and to a considerable extent will continue to be, despite the Cullen Fund.

Mind you, we boomers are paying for our parent’s super. That’s the way it is.

Footnote: Once again, the column is full and I have many more letters about different generations’ plights, at least some of which should be published. So no more, please.

No paywalls or ads — just generous people like you. All Kiwis deserve accurate, unbiased financial guidance. So let’s keep it free. Can you help? Every bit makes a difference.

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.