25 February, 2010
Dunne welcomes passage of Student Loans Bill
Revenue Minister Peter Dunne this evening welcomed the passage of the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill in Parliament today.
"As well as correcting certain technical aspects of the scheme, the new legislation will make interest-free loans available to borrowers who live in countries that are part of the Realm of New Zealand - Niue, the Cook Islands, Tokelau or the Ross Dependency - and who meet the requirement to be present in one of those countries for at least 183 consecutive days.
"This is good news for these borrowers and will encourage people from these countries, which share a special relationship with New Zealand, to return home and contribute to their countries' futures," Mr Dunne said.
"Interest-free loans will also be extended to include students who are furthering their education overseas through full-time study under a formal exchange programme or formal agreement between New Zealand and overseas tertiary education providers. This includes post-graduate study that cannot be completed in New Zealand.
"This is another positive step that will allow people to further their studies overseas in a way that will benefit New Zealand in the longer term," Mr Dunne said.
Other matters contained in the bill include a change that will allow Inland Revenue to increase the standard repayment deduction rate from 10 percent to 15 percent when borrowers have failed to have the correct deductions made, restoring the hardship relief provisions to reflect their original intention and making loans interest-free for borrowers who return to New Zealand and fully repay their loan before they have been back 183 days.
The formula for setting the interest rate has also been moved from the Student Loan Scheme (Interest Rates Formulas) Regulations 2006 to the Student Loan Scheme Act 1992. The interest rate under the formula for the 2010-11 tax year will be 6.6%.
"The student loans scheme is a significant Crown asset and an important financial commitment for the many thousands of borrowers who rely on the scheme to further their education. The changes will help to ensure that the law on the repayment of student loans is clear and consistent for borrowers and that it is managed efficiently for the Crown," Mr Dunne said.