Tertiary Education Minister Steven Joyce and Revenue Minister Peter Dunne announced the write-off on student loans had fallen to 39 cents in every dollar borrowed, down from 48 cents when interest was taken off the loans by Labour.
”When we came into government, we committed to get that cost down and initially targeted getting it under 40 cents in the dollar,” Fairfax NZ reported Joyce as saying.
“I’m pleased to be able to say that changes over the past three budgets have helped reduce that cost from 48 cents to 39 cents in the dollar so far. That’s a very significant achievement which reduces the overall write-off cost, and increases the value of the student loan book.”
National has introduced a number of changes to the scheme designed to tighten eligibility and recoup more of the outstanding debt quicker.
In this year’s budget, the compulsory repayment rate for former students was increased from 10 to 12 per cent of all income earned over $19,084 per annum, and the voluntary repayment scheme, which offered a 10 percent discount, was scrapped.
The change in repayment rates took $20 a week out of the pay of someone on $70,000 per year or $11.12 a week out of someone on $48,000.
The value of loan book had improved by $286m, Joyce said.
Other recent changes to the scheme rolled out in previous years have been cutting the ”repayment holiday” period for people overseas, refusing loans for living costs to those aged over 55 and freezing the repayment threshold at $19,084 until 2015.
Dunne said there could be further improvements by ”improving the compliance of overseas-based borrowers”.
“Inland Revenue is currently focusing in this area through its initiative to collect overdue repayments from overseas-based borrowers. To date, the initiative has been successful in contacting and collecting from these borrowers who previously made little or no repayments toward their student loan,” Dunne said.
Borrowers based in Australia and the UK, totalling around 57,000 people, are being targeted.
There is a total of about $13b in student debt outstanding. About 82 per cent of full-time students take out a student loan.