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IRD stats underscore value of no interest on loans

Hon Trevor Mallard
Minister of Education

1 August 2005 Media Statement

IRD stats underscore value of no interest on loans

The latest student loan quarterly report issued by the Inland Revenue Department yesterday underscores the value of Labour's proposal to scrap interest on student loans, Education Minister Trevor Mallard said today.

"Over 445,000 kiwis stand to benefit from Labour's no interest policy," Trevor Mallard said.

"The latest quarterly report shows that the average student loan balance is $14,989. A person with an average student loan who earns a salary of $35,000 per year will pay back their loan nearly three years faster and save over $6,900 in interest under Labour's proposal.

"Over 58,600 student loan borrowers with balances over $30,000 could save tens of thousands of dollars under Labour's no interest policy.

"The report also shows that there are almost 50,000 borrowers in New Zealand and over 12,000 borrowers overseas with an overdue repayment obligation. Labour has proposed an amnesty on penalties for those who return to New Zealand or enter into acceptable arrangements with IRD.

"Labour's proposed amnesty will help people get their student loans under control and provides a great incentive for our best and brightest to come home.

"The report also underlines how student loan borrowers are already benefiting under Labour. In the last quarter more than $129 million of interest was written off for those who are still studying.

"More than 110,000 borrowers benefited from the full interest write-off provisions - that's 110,000 kiwis who are already better off under Labour, and will be even better off in the future because of our no interest policy.

"No matter which way you look at it, Labour's no interest on student loans policy is great news for hundreds of thousands of New Zealanders. Student loan borrowers will be much better off under Labour's interest free policy than National's complicated tax rebate," Trevor Mallard concluded.

* Note: Labour's repayment time comparisons assume student loan repayment thresholds will increase each year by the rate of inflation and that salaries will grow by 3 percent per annum.

ENDS

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