Hon Peter Dunne
Student loan interest rate set for 2006-07 year
The student loan interest rate for the 2006-07 tax year has been set at 6.9%, down from 7.0%, Tertiary Education Minister Michael Cullen and Revenue Minister Peter Dunne announced today.
"Most borrowers living in New Zealand will have interest-free student loans from 1 April, thanks to major legislation enacted last year that will reduce the cost of tertiary education for hundreds of thousands of people," the Ministers said.
"Borrowers who qualify for interest-free loans will continue to be charged interest during the tax year but their interest will be written off after 31 March 2007.
"Most borrowers who live overseas for more than six months, however, will not qualify for the write-off.
"The new interest rate – for those who still have to pay interest – was arrived at by means of a recently adopted formula that will add certainty to the annual process of setting the rate.
"Under the formula, the total interest rate is based on the five-year average of the ten-year bond rate, plus a margin to cover administration costs," they said.
The new interest rate was approved by Order in Council today.
Contact: Mike Jaspers, press secretary, 04 471 9412 or 021 270 9013