$2.6 billion less student loan debt predicted
8 October 2003 Media Statement
$2.6 billion less student loan debt predicted – Report
The latest Student Loan Scheme Annual Report, tabled in Parliament today, shows a $2.6 billion fall in debt forecasts, largely as a result of government policies.
The Ministry of Education now estimates that the overall gross student loan debt by June 2020 will be $14.4 billion. This compares with an estimate of $17.0 billion last year. The decreased loan forecasts are credited to policy changes introduced in the 2002 and 2003 budgets, especially the new fee and course costs maxima. Student debt forecasts were estimated at $19 billion in 2000, but, while they have reduced since that year, previous reductions have been primarily due to data improvements.
Associate Education (Tertiary Education) Minister Steve Maharey welcomed the findings, saying they are concrete sign of the government’s ongoing moves to make tertiary education more affordable for students.
“As a result of moves to cut the costs to students of tertiary education, like the introduction of no-interest-while-studying, three years of fee freezes and the new fee and course costs maxima system, total student debt is now expected to rise more slowly.
“We can also see changes emerging in the profile of the scheme, now over a decade old, as it starts to mature. The amount repaid since the scheme began – more than $1.9 billion - is around a quarter of all the debt that has been incurred, with more than 120,000 New Zealanders having now fully repaid their student loans. Nearly $400 million was repaid in 2002/03.
“There is no room for complacency, however. The Labour-Progressive government is committed to further improvement to the student support system that will continue to reduce projected debt, in particular by widening eligibility for student allowances,” Steve Maharey said.
The report contains the audited financial statements for the year to 30 June 2003, as well as a range of other information. It includes data from Ministry of Social Development, Ministry of Education, and Inland Revenue records in line with the Auditor-General’s recommendations in 2000 to improve the information available about the student loan scheme.
This year’s report also includes some early results from the integrated data-set developed by Statistics New Zealand as well as the first actuarial valuation of the scheme.
The 2003 Student Loan Scheme Annual Report is available on the Ministry of Education website at www.minedu.govt.nz.
Student Loan Scheme Annual Report: Key Findings
Among the key findings of the Student Loan Scheme Annual Report are:
- the average
amount borrowed in an academic year has increased from
$3,628 in 1992 to $6,135 in 2001 and $6,204 in 2002;
- in the 2002 academic year, 150,575 students borrowed $934 million through the Student Loan Scheme;
- 52 percent of all borrowers had a loan balance under $10,000 and 5 percent of all borrowers had a loan balance greater than $40,000;
- since the commencement of the scheme, $1,870 million in interest and principal repayments has been collected. This amounts to about a quarter of all of the debt incurred since the scheme began;
- as at 30 June 2003, 128,688 borrowers had repaid their loans in full since the scheme began in 1992. 21,770 loans were repaid in 2002/03;
- the level of overdue loan repayments as at 30 June 2003 was $101 million (or 1.9 percent of the total outstanding debt), of which 43.5 percent ($44 million) was under instalment arrangement for payment;
- the average cumulative student loan debt owing to the government and administered by Inland Revenue has increased from $5,525 in 1993/94 to $12,643 in 2001/02 and $13,680 in 2002/03;
- there were 390,027 people with outstanding loan balances held by Inland Revenue at 30 June 2003;
- the total outstanding debt held by both Inland Revenue and the Ministry of Social Development through StudyLink, at 30 June 2003 was $5,370 million;
- the total value of interest write-offs recorded in the year to 30 June 2003 was $198 million;
- the forecast average loan repayment time is estimated at 9.5 years compared with a forecast time in June 2002 of 10.3 years; and
- the expected value of student loan debt is expected to rise to $14.4 billion by 2019/20. This compares with a June 2002 estimate of $17.0 billion.