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Reduced repayment times for student loans

18 December 2007 Media Statement

Reduced repayment times for student loans

Student loan repayment times are falling. That is the main finding reported in the Student Loan Scheme annual report tabled in Parliament today by the Minister for Tertiary Education, Pete Hodgson.

The report shows that of those who finished their study in 1999 and remain in New Zealand, half repaid in around seven years. For those who left in 2003 – who have had the benefit of no interest while studying, plus a strong employment market – repayments times are shorter. Half are expected to have repaid within six years of completion and three-quarters within 11 years. The report also shows that women repay just as fast as men.

“Reduced repayment times are the result of measures the Labour-led government took to improve the affordability of tertiary education,” said Pete Hodgson. “We cut interest while studying in 2000, we have controlled fee rises and last year we removed interest for those who have finished their studies.”

The report also quotes research on the longer term outcomes of borrowing. It shows that those who take out loans and gain tertiary qualifications do better in the labour force. They have lower unemployment, higher incomes and increased wellbeing. In addition, having a loan does not play a significant part in decisions on home ownership or having children. Nor is it significant in determining if people leave New Zealand.

“The loan scheme is an important means of opening access to tertiary education for New Zealanders,” said Pete Hodgson. Since 1994, the percentage of New Zealanders aged 15 and over who have participated in tertiary education has increased from 8.9 percent to 13.4 percent, and the number of people with Bachelor qualifications or higher has nearly doubled.

The report shows that 167,420 people used the loan scheme in 2006, with half borrowing $5,663 or less. Of the 499,259 people with a student loan, half owe $11,087 or less.


ends

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