18 July 2000 Media Statement

Planned improvements to student loan processing

Changes are being made to improve the processing of student loans for the next academic year, Social Services and Employment Minister Steve Maharey said today.

Mr Maharey today released the independent review of the processing of student loans by the Department of Work and Income. He said a number of improvements were already underway or under study by the Department of Work and Income which processes the loans. These included:
 on-campus support is being reviewed with feasibility and cost studies undertaken on various support options before any decisions are made;
 correspondence to students will be clearer and easier to follow;
 the electronic Verification of Study process for getting student’s course information from institutions is being reviewed; and
 there will be better staff training and information for staff so they give consistent information on loans to students.

"Students and tertiary providers were badly affected by problems with loans processing this year.

"The new Government inherited a system which was clearly not ready for the bulge of loan applications when they occurred at the start of the year. We put a lot of effort into easing students through a very stressful time and getting them into their classes. The cooperation and goodwill shown by tertiary institutions and students' associations was a key factor during this time.

“Now it is important that the focus of the Department is on finding solutions to the problems that occurred and that the solutions are in place before loan processing for the next academic year. The Department reports that some improvements are in place or being worked on. Others are still being looked at with further decisions to be made."

Mr Maharey said that among the lessons from last summer, was that tertiary institutions and the Department needed to work together for a more effective delivery of student loans. However the lead role in this was the responsibility of the Department.

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Problems associated with loan processing by the Department for the 2000 academic year were well known and as a result he had had the Ministry of Social Policy commission an independent evaluation to ensure improvements for the next year.

The evaluation had found a core problem lay in the Department of Work and Income’s centralised system of a national call and processing centre that was responsible for virtually all functions.

Also there had been insufficient acknowledgment of concerns raised by tertiary institutions and that the Department had not taken sufficient account of the complexities of the relationships that needed to be managed to make the system work effectively.

“The focus was on what needed to happen, from DWI’s perspective, to process student loans without sufficiently acknowledging the interdependency of student loans and enrolment from both the students’ and institutions’ points of view,” the report stated.

When things started to go wrong the “problems tended to snowball with the system going into a vicious downward spiral during the main enrolment period, as evidenced by the call centre overload.”

The evaluation recommended the system have greater emphasis on delivering aspects of loan processing on campus.

Mr Maharey said options on this were being explored in terms of feasibility and cost.

Any localised functions would not be intended to replace the centralised call-centre or loans processing services. Rather they would be to enhance the overall delivery of student loans by providing alternative options to assist students.

Mr Maharey said that for the next academic year some of the risk of problems occurring should be lessened, as a considerable number of students already had their details on the system and there would be greater experience of how the system was meant to work.

ENDS

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