Dunne: Loans Bill focuses on efficiency
A bill tabled in Parliament this afternoon introduces a number of remedial measures to ensure that the student loan scheme functions as intended, Revenue Minister Peter Dunne said today.
"With over half a million borrowers and a nominal value of $9.6 billion, the student loan scheme represents a significant Crown asset and must be managed in an efficient and consistent manner," Mr Dunne said.
"As well as correcting certain technical aspects of the scheme, the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill will also make interest-free loans available to borrowers who live in countries that are part of the Realm of New Zealand – Niue, the Cook Islands, Tokelau or the Ross Dependency – and who meet the requirement to be present in one of those countries for at least 183 consecutive days.
"This is a very positive move, to encourage people from these countries, which share a special relationship with New Zealand, to return home and contribute to their countries' futures," Mr Dunne said.
"Interest-free loans will also be extended to include students who are furthering their education overseas through full-time study under a formal exchange programme or formal agreement between New Zealand and overseas tertiary education providers.
"This is another positive step that will allow people to further their studies overseas in a way that will benefit New Zealand in the longer term.
"The bill also introduces a change which will allow Inland Revenue to increase the standard repayment deduction rate from 10 percent to 15 percent when borrowers have failed to have the correct deductions made. The higher rate will apply until the under-deductions, including any late payment penalties have been fully repaid," he said.
Technical and remedial changes contained in the bill include:
- restoring the hardship relief provisions to reflect their original intention;
- making loans interest-free for borrowers who return to New Zealand and fully repay their loan before they have been back 183 days; and
- moving the formula that is used to determine the student loan interest rate from regulations to permanent legislation.
Together these measures will ensure that the law on the repayment of student loans is clear, consistent and that it operates as intended," Mr Dunne said.
For more information on the changes see the commentary on the Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill, at www.taxpolicy.ird.govt.nz.
Mark Stewart - Press Secretary, Office of Hon Peter Dunne
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