Rise in threshold for student loan repayments

The income level at which borrowers must start to repay student loans will rise from $14,768 to $15,132 next April.

Announcing the measure today, Revenue Minister Michael Cullen and Associate Education [Tertiary Education] Minister Steve Maharey said the threshold increase was in line with routine adjustments to the domestic purposes benefit.

The repayment threshold sets the income level at which student loan repayments begin. Borrowers are required to pay towards their loan 10 cents in the dollar on income exceeding the threshold. The threshold is reviewed each year.

"The student loan repayment threshold is aligned with the amount of domestic purposes benefit paid to people with two or more children," the Ministers said. "This policy ensures that student loan repayments are not deducted from most social welfare benefits, to encourage beneficiaries to undertake tertiary education and improve their job opportunities.

"Raising New Zealanders' skill levels is vital to the country's future prosperity. For this reason the Government is committed to making tertiary education more affordable.

"We have removed the interest on student loans for full-time, full-year students, as well as for part-timers who earn $24,596 or less a year. This will make a real difference to present and future students."

"Keeping fees as low as possible also plays a key role in making tertiary education more affordable. This is the reason for next year's increase in funding tertiary institutions to enable them to hold their fees at this year's levels," the Ministers said.

Contact: David Carrigan (IRD advisor) 04 4719728 or 021 432 100