Hon Dr Michael Cullen
Minister of Finance
Hon Peter Dunne
Minister of Revenue
MEDIA STATEMENT
Burden Eased For Overseas Student Loan Borrowers
The passage today of a student loan scheme bill will make life easier for borrowers who are overseas and simplifies the administration of the student loan scheme, Tertiary Education Minister Michael Cullen and Revenue Minister Peter Dunne said today.
The changes for borrowers who are overseas include a repayment holiday of up to three years, new repayment obligations, extension of interest-free loans to full-time undergraduates, and extension of the amnesty for those who have fallen into arrears with their payments.
Other changes in the Student Loan Amendment Bill include a reduction in the late payment penalty for all borrowers, and allowing data matching between Inland Revenue and Customs to ensure correct entitlement to interest-free loans.
"The changes bring the student loan scheme rules into line with the aims of interest-free loans, one of which is to reduce barriers to the return of skilled New Zealanders," the Ministers said.
"The new rules recognise that it is not always easy for people to repay their loans while doing their OE and working in holiday jobs, so it is probably unrealistic to expect them to make regular repayments under those circumstances.
"By making it easier for them to repay their student loans and avoid mounting debt, we remove a disincentive for them to return to New Zealand when they are ready.
"At the same time, the introduction last year of interest-free loans that are generally limited to borrowers living in New Zealand has increased financial incentives for borrowers to leave New Zealand without informing Inland Revenue, because their loans would then attract interest.
"That is the reason for introducing data matching between Inland Revenue and New Zealand Customs, to ensure that only those entitled to interest-free loans have access to them.
"The bill also reduces the late payment penalty for all borrowers, here and overseas, to make it less punitive, and amends the hardship provisions to give greater flexibility to Inland Revenue in requiring payment.
"Borrowers will receive more information about the changes that affect them in a newsletter that will be enclosed with their Inland Revenue statement of account, which they will receive in early May," said the Ministers.
"I welcome these changes, which are designed to make it easier for borrowers to meet their repayment obligations and for Inland Revenue to administer the student loan scheme efficiently and fairly," Peter Dunne said.
"These changes underline our efforts through interest-free loans and other support measures which are helping to make tertiary education more accessible. We are ensuring greater numbers of students can gain the skills needed to help transform this economy," Dr Cullen said.