Student Loan Repayment Threshold is Too Low
Today the Government announced a small movement in the income threshold at which student borrowers must begin repaying their loans. Revenue Minister Peter Dunne said that from 1 April next year borrowers must begin repaying their loan when their income reaches just $17,784.
“For people coming out of tertiary education and earning just $17,784 per year, having to start repaying their student loan is a huge burden,” said Conor Roberts, Co-president of the New Zealand Union of Students’ Associations (NZUSA).
“New Zealand has one of the harshest repayment thresholds in the developed world, our graduates are burdened with having to pay 10% of their income at an incredibly low level of income.”
“In Canada they don’t have to start repaying their loans until their income reaches NZ$29,614, in Australian the threshold is NZ$37,335 and in the United Kingdom it is NZ$37,400.”
“Such a low threshold means that students are more likely to head off overseas rather than develop their skills in New Zealand. It also means that people are going to put off starting families because they are lumbered with repayments on high levels of debt at low levels of income.”
“This small inflation adjustment comes on the back of announcements of huge fee increases such as Massey University who have increased their undergraduate fees by 10% and up to 100% for research postgraduate fees.”
“With the Government allowing such huge fee increases and then expecting graduates to begin paying their loan off at such low levels, students may start to wonder if they are loosing all the gains made from Labour’s no interest on loans policy,” Mr Roberts concluded.