Dunne announces student loan scheme amendments
Orders in Council have been made by Cabinet affecting different aspects of the student loan scheme, Revenue Minister Peter Dunne announced today.
- increase the student loan repayment percentage
- require a borrower’s contact person’s details to be provided to Inland Revenue and
- add new charities to the list of charities whose volunteers may qualify for interest-free student loans.
The Student Loan Scheme (Repayment Percentage) Regulations 2012 raises the student loan repayment rate from 10 cents to 12 cents in every dollar earned over the repayment threshold of $367 a week or $19,084 a year.
This increase was announced in Budget 2012 and will come into force on 1 April 2013. The median repayment time for all borrowers will decrease by about five months.
Mr Dunne says that increasing the repayment rate will help the Government to reduce the cost of the Student Loan Scheme at a time of significant fiscal pressure and that the change will improve taxpayers’ investment in the scheme and in tertiary education.
“With borrowers paying off their loans faster, the Government will be able to invest more in the next generation of students. New Zealand-based borrowers will pay the same amount in total, but the key thing is that they will clear their loan faster,” he said.
The second Order in Council, the Student Loan Scheme (Details of Borrower’s Contact Person) Regulations 2012, will allow students applying for a new student loan for study starting on or after 1 January 2013 to supply additional details when nominating a New Zealand-based contact person.
This will come into force on 1 January 2013.
“Requiring a New Zealand-based contact person brings the loan scheme more into line with accepted practice for lending and should help make borrowers more accountable,” he said.
The Student Loan Scheme (Charitable Organisations) Amendment Regulations 2012 adds two charities to the list of charities whose volunteers may qualify for interest-free student loans while working for those charities overseas from 1 September this year:
The two new charities are Empower Missions Trust Incorporated and Troppodoc Charitable Trust.
Mr Dunne said that borrowers must generally be present in New Zealand for six months to qualify for an interest-free loan. However, an exemption may be granted for certain borrowers who are overseas, including those who are working for free or for a token payment for one of the accepted charitable organisations.
Borrowers working overseas for these charitable organisations must still apply to Inland Revenue to determine if they qualify for the interest write-off.
“These amendments are part of a continuing focus on steadily making the student loan scheme stronger and fairer,” Mr Dunne said.
Mark Stewart | Press Secretary | Office of Hon Peter Dunne
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