14 December 2001 Media Statement

Student Loan Scheme report tabled in Parliament

The annual report of the student loan scheme was tabled in Parliament this afternoon.

The report provides an overview of current government policy for student financial support, and it reports the financial position of the Student Loan Scheme for the period ending 30 June 2000. It also provides general information about borrowers’ use of the scheme and combines information from Work and Income, the Ministry of Education, and Inland Revenue.

Steve Maharey said the tabling in Parliament of the report is a significant step in the government’s commitment to strengthen reporting requirements on the Student Loan Scheme.

“The government agreed with the Controller and Auditor-General’s June 2000 recommendation that there needs to be more information publicly available about the Student Loan Scheme. The annual report tabled today is the first to contain information on the costs of the scheme, the provision for doubtful debt, overseas borrowers, outstanding debt, repayment times and long-term debt projections.

“This is also the first time that the annual report on the Student Loan Scheme has been tabled in Parliament. In future, it will be tabled in the house every year, and every year it is our intention that the information it contains will be more robust, more focussed and more useful.

“The report shows that use of the student loan scheme by tertiary students continues to increase, reflecting more people seeking to obtain the qualifications necessary for employment or for further study. It also reveals:
- the average repayment time for borrowers is also lower than previously forecast (see table over page). The forecast repayment time has been revised down from 13.6 years to 9.6 years. This is the first time since average repayment time has been measured that it has been less than ten years;
- there has been a small increase in the use of the student loan scheme by eligible students – up from 50% in 1999 to 55% in 2000;
- the overall student loan debt projection has been revised downwards by $3b to $16b by 2019/20 due to an increase in the real income growth assumption in the Tertiary Education Student Loan Analysis (TESLA) model.

“Total outstanding student debt at 31 June 2001 was $4.1b. While this is a considerable sum it needs to be remembered that the Labour-Alliance government’s policies to cut fees in real terms and to wipe the interest off loans while students study are having a real impact on borrowers individually.

“The average student debt has become static for the first time in the life of the scheme ($12,496 in 2000 compared with $12,413 in 1999), students are saving $900 in interest charges on average each year and as a result they are able to pay their loans back quicker,” Steve Maharey said.

Copies of the Student Loan Scheme Annual Report Incorporating the Financial Report to 30 June 2001 can be obtained from Susan Cauchi, Ministry of Education, (04) 463 8633, Susan.Cauchi@minedu.govt.nz.

Group Average repayment time (years)
Annual Report Previous (May 2001) forecast
European 8.6 12.5
Maori 9.5 13.2
Other 12.7 17.5

All Males 7.2 9.6
All Females 11.5 16.8

Total 9.6 13.6

ENDS

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