Maharey announces freeze on student loan interest rate

The Associate Minister of Education (Tertiary Education), Steve Maharey, today announced that the student loan interest rate for the 2000/01 tax year will be frozen while the Government reviews the way the rate is struck.

The Government is required to set the interest rate student loan borrowers are charged before the 28 February each year. Using present methodology the interest charged would have risen from the current 7.0% rate to 7.6% for the 2000/01 tax year beginning on 1 April 2000. Cabinet has decided to freeze the rate because officials are due to report next month on the present interest rate setting methodology.

"We are determined to cut the costs of gaining a tertiary education. We said that on the campaign trail last year and we are keeping our word.

"Today's announcement will help former students to get their loan debts under control. We do realise that a more permanent solution to student indebtedness is needed and that is why the Government has committed itself to a thorough examination of the loans system.

"New Zealand cannot afford to drive talented young people overseas to escape their student loan debts. We need their skills and knowledge here if we are to succeed as a small nation in the 21st century.

"The new Government has also inherited a soon-to-be completed review of the interest rate setting methodology. This is due to be completed by mid-March," Steve Maharey said.

ENDS

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