11 per cent increase in student loan repaymentsTertiary Education, Skills and Employment
The latest Student Loan Scheme annual report shows an 11 per cent increase in repayments and a decrease in the overall cost of the scheme, Tertiary Education, Skills and Employment Minister Steven Joyce says.
These are some of the key findings of the report, which was tabled in Parliament today by the Minister.
“The Government remains committed to interest-free student loans, but it is important the scheme is affordable for students and taxpayers, and sustainable for the country,” Mr Joyce says.
“The write-down on student loan lending reached 47 cents for each dollar lent in 2008/2009. We have now reduced that to 39 cents in the dollar, and are working to reduce the cost further.
“The Government has been getting more young people through higher levels of tertiary education, and student loans are a key means to help with that goal. Our recent policy changes have focussed student loans more on people who are likely to achieve qualifications and then earn enough to pay back their loan in a reasonable time.”
“While we have seen some success in reducing the cost of the student loan scheme to taxpayers, it still remains high. The Government is working to improve the compliance of overseas based borrowers, and that initiative together with policy changes made in Budget 2012 will both tighten lending criteria and increase the speed of repayments.
“Inland Revenue is continuing to scale up its work to collect overdue repayments from overseas-based borrowers. To date, they have been successful in contacting and collecting from many borrowers who previously made little or no repayments toward their student loan,” Mr Joyce says.
The report’s findings include:
- The cost of lending has fallen 17.5% over the last three years. The cost fell from 47 cents per dollar in the 2009 valuation, to 39 cents per dollar in the current year.
- Repayments increased by 11% to $767 million in 2011/2012
- The median repayment time is 6.7 years and it reduces to 5.5 years for those who remain in New Zealand until repayment
- The valuation of the loan scheme increased by $286 million in 2011/2012
- The loans uptake rate by students was 74%, up from 73% in 2010/2011
- Inland Revenue is chasing borrowers overseas who aren’t meeting their repayment obligations. So far, they have gained $19.4 million, which is $12 for each dollar spent on the project.
For the full annual report, visit: