Hon Trevor Mallard
Minister of Education

28 July 2005 Media Statement

Labour stands by student loan calculator

Labour stands by its student loan repayment calculator, Education Minister Trevor Mallard said today.

"We believe that our calculator provides a reliable estimate of how student loan borrowers will benefit from Labour's interest free policy.

"Our calculator is based on the following assumptions:

1. The repayment threshold will increase each year by the rate of inflation (2.8 percent), which is the case under current policy.

2. The current interest rate of 7 percent is made up of an inflation adjustment of 2.8 percent and base interest of 4.2 percent.

3. Income growth is set by the user, we have automatically set this to 3 percent and have recommended that users put no less than 2 percent.

4. Inflation is calculated on an annual basis.

5. The Interest Reduction provisions are factored in.

"Mr English's scenarios are based on a zero percent salary increase.

"It is important to note that the Labour calculator automatically inputs a 3 per cent salary increase. The 3 per cent salary increase assumption was made completely clear in all Labour's media statements.

"On the Labour party website, it is also suggested that that people should input a minimum of 2 per cent increase.

"It would be highly unusual for employees not to receive any wage increases - yet this is Bill English's assumption - although it appears he is hiding this assumption from reporters.

"It is ridiculous for Mr English to suggest this calculator should have been tested by the IRD and Treasury. If this had been done, Mr English would be the first person to accuse the government of using neutral public servants for party political purposes," Trevor Mallard said.

ENDS

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