Hon Anne Tolley
Minister for Tertiary Education
Ministers welcome boost for borrowers who pay student loans early
Changes to the Student Loan Scheme tabled in Parliament yesterday are good news for people who want to pay off their student loans sooner, Revenue Minister Peter Dunne and Tertiary Education Minister Anne Tolley say.
The Student Loan Scheme (Repayment Bonus) Amendment Bill, which Mr Dunne will introduce, provides a 10 percent bonus for both New Zealand and overseas-based borrowers who make voluntary repayments on their student loans of $500 or more in a tax year. While the legislation is expected to be enacted by the end of 2009, the bonus will apply to eligible voluntary payments made from 1 April 2009.
All borrowers will be eligible for the bonus provided they are fully compliant with their student loan obligations and have a student loan balance with Inland Revenue of $550 or more at the beginning of the tax year in which the voluntary payments are made.
The bonus will be credited to the borrower's student loan account after the end of the tax year, thus reducing the loan balance.
For borrowers paying off their loan in full, the maximum bonus payable will be one-eleventh of the loan balance – for example, if the loan balance is $1100, the borrower would make a voluntary payment of $1000 and the maximum amount of the bonus would be $100. For borrowers paying off their loan in full after April 2010 the bonus will be provided at the time of final payment.
Borrowers wanting to repay their loan in full before 31 March 2010 can either:
- pay the loan balance in full, with the bonus being credited to their loan balance and the relative overpayment refunded after 1 April 2010; or
- pay 10/11th of their loan balance, with the bonus being credited to their loan account after 1 April 2010.
"The measures in this bill will provide a welcome boost to people who want to pay off their student loans sooner," the Ministers said.
"And because there is no time limit on entitlement to the bonus scheme, borrowers who may be in a better position to make extra payments later in their working lives will be able to take advantage of the bonus incentive when it best suits their financial position," they said
Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985 |
Helene Ambler | Press Secretary | Office of Hon Anne Tolley
Cell +64 21 491 761 |