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Commissioner advises against extra loan repayment

Hon Bill English National Party Education Spokesman

3 April 2006

Retirement Commissioner advises against extra loan repayments

The Retirement Commissioner is advising student debtors not to repay their student loans voluntarily, says National Party Education spokesman Bill English.

The commissioner's sorted.org.nz website says:

Usually we suggest that people pay off debt as fast as they can, given that the longer they hold the loan, and the bigger it is, the more interest they pay. Student loans will be different (as of 1 April 2006) because if you're living in NZ, you won't be paying interest.

"Statements like this from a Government appointee prove the point National has been making all along - Labour's policy will lead to students borrowing more and repaying less," says Mr English.

"National does not want to see student debt levels get out of control."

A report from the Ministry of Education and the Treasury estimates that the amount of voluntary repayments will be reduced by 80% as a result of Labour's interest free student loans policy, which came into effect on Saturday.

Mr English says with advice like this from the Retirement Commissioner these forecasts seem optimistic.

"This irresponsible policy has been law for only two days and already we have had a Government admission that they don't know where 35,000 debtors are and a Government-appointed official advising students to stop making voluntary repayments."

ENDS

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