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Student Loan Interest Rate To Remain Unchanged

27 February 2001

Student Loan Interest Rate To Remain Unchanged - Steve Maharey

The headline interest rate for the student loan scheme is to remain at 7% following the Government's decision to adopt a new rate setting formula, Associate Education Minister (Tertiary) Steve Maharey announced today.

Mr Maharey also announced adjustments to the thresholds of the student loan scheme. The repayment threshold will rise from $14,678 to $15,132, and the income threshold at which part-time students receive a full interest write-off will rise from $24,596 to $25,073.

"The Government has acted to keep the costs of the loan scheme down.

"The 2001/02 tax year headline interest rate is the first set under a new formula which has arisen out of the student loan interest rate review. Under the previous formula the interest rate would have risen to 7.9%.

"That equates to a saving of up to $180 per year in interest charges for a borrower with a $20,000 debt.

"The headline interest rate is the highest rate that borrowers can possibly pay. However less than 20% of borrowers actually face the headline rate.

"Under changes introduced by this Government, most borrowers qualify for full or partial interest write offs depending on their level of income, the size of their debt and whether they are full or part-time students.

"The average interest rate actually faced by borrowers is estimated at 3%," Steve Maharey said.

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