Student Loans
Encouraging personal responsibility and getting better value for taxpayers are key features of Budget 2011 changes to the student loan scheme.
The changes will direct lending to those who most need it, while preserving the essential features of the current scheme. Key initiatives include:
- restricting student loan eligibility for those with an overdue student loan repayment obligation of $500 or more who are in default for more than one year
- restricting borrowing for people aged 55 and over to tuition fees only
- removing the entitlement for part-time full-year students to borrow for course-related costs
- suspending inflation adjustments to the student loan repayment threshold until 1 April 2015, and
- shortening the repayment holiday for overseas-based borrowers from three years to one year, and requiring borrowers to apply for the repayment holiday and provide a New Zealand-based contact person before they go overseas.
- Figure 4 - Cost of student loans
- Source: The Treasury
The changes result in operating savings of $277 million over five years and capital savings totalling $170 million. This compares with the $1.58 billion in student loans the Government is lending in 2010/11.
