Overview

The Student Loan Scheme Amendment Bill introduces changes announced in Budget 2011. The bill introduces three major changes:

  • Losses will be excluded from the calculation of income for student loan repayment purposes and, as a consequence of this change, the pay-period assessment policy will be extended to the salary and wage earnings of all borrowers.
  • Inland Revenue will be able to receive details of a borrower’s contact person from StudyLink, which manages student loan applications. Every new loan application will have to include a contact person as a condition of accessing a student loan.
  • The repayment holiday will be reduced from three years to one. Borrowers will be required to apply for their repayment holiday and provide the name of a contact person when they do so.

In addition, during the implementation of the reforms included in the Student Loan Scheme Act 2011, officials have identified a number of other minor amendments that need to be made to the Student Loan Scheme Act 2011. The amendments proposed are intended to bring the legislation up-to-date with changes in the IT systems used to implement the reforms, and to ensure that the legislation achieves its original policy intent.

The student loan reforms were originally based on Inland Revenue implementing a new computer system to administer student loans. However, during the passage of the bill, it became apparent that Inland Revenue would not be able to implement the reforms in a new system in time and therefore the reforms were implemented in the existing FIRST computer systems. Reverting to the original system to implement the student loan reforms resulted in a number of changes being made to the bill at the Select Committee stage, and the deferral of the application date of some provisions until 1 April 2013.

At the Finance and Expenditure Committee’s meeting with officials on 8 February, the Committee raised a number of questions on the student loan scheme. Officials’ responses to these questions are in the section at the end of this report.