Hon Steve Maharey
Associate Minister of Education (Tertiary Education)
Higher income thresholds for student loan repayments and interest write-offs
Income thresholds for student loan repayments and interest write-offs will rise from next April, Revenue Minister Michael Cullen and Associate Education (Tertiary Education) Minister Steve Maharey announced today.
The income level at which borrowers must start to repay their student loans will rise from $15,132 to $15,496. The income level under which part-time or part-year borrowers may have interest on their loans fully written off goes up from $25,073 to $25,378.
The changes were approved by Order in Council today.
The increases in the thresholds were in line with routine adjustments to the domestic purposes benefit, the Ministers said.
The repayment threshold sets the income level at which student loan repayments begin. Borrowers are required to make payments towards their loan of 10 cents in the dollar on income exceeding the threshold. The threshold is reviewed each year.
"The student loan repayment threshold is aligned with the domestic purposes benefit paid to people with two or more children. The purpose of this alignment is to encourage beneficiaries to undertake tertiary education by ensuring that student loan repayments are not deducted from most social welfare benefits."
The interest write-off threshold sets the amount of income that part-time or part-year borrowers may have and still receive a full interest write-off, and is aligned with the amount of other income that may be received before the domestic purposes benefit is fully abated. This threshold first applied from the 2000-01 income year. Full-time, full-year students receive an interest write-off irrespective of their income.
"The interest write-off for students is part of the Government's strategy of making tertiary education more affordable. About $65 million in interest has been written off for students for the 2000-01 income year," the Ministers said.
Contact: Michael Gibbs [Steve Maharey's press secretary] 471-9154 or 021-270-9115 or Patricia Herbert [Michael Cullen's press secretary] 471-9412 or 021-270-9013