The New Zealand Government has proposed changes to the Student Loan Scheme in order to increase repayment rates and bring the overall loan balance to a more manageable figure.

“This in turn will make the scheme fairer for the vast majority of borrowers who do honour their loan obligations and for taxpayers more generally,” says Revenue Minister Peter Dunne.

However student advocate groups are opposing the move saying they will make it even harder for new graduates to find their feet as the repayments start too low and demand too much.

“New Zealand graduates already make payments from a level of income below any other income-contingent loans scheme in the world; the rate of payment proposed will now also be higher than is demanded anywhere else,” said Pete Hodkinson, President of the New Zealand Union of Students’ Associations (NZUSA).

Currently those with student loans who earn over $19,084 per year pay 10% of their income over the threshold. This will rise to 12%, an increase that the Massey University Extramural Students Society and NZUSA estimate will cost students and graduates between $15 and $30 per week.

The Green Party is also opposing the Government’s proposal, stating that a graduated rate would be fairer and more effective.

“A better alternative would be a progressive repayment rate that kicks in when graduates are actually earn[ing] higher incomes so that those who can afford to repay their loans do so, while those on lower incomes have a chance to find their feet first,” suggests Green Party student spokesperson Holly Walker.

The Government has also indicated it plans to make changes around student allowance eligibility and is considering a student allowance cap of four years.

The student allowance scheme allows students from low income families access to funding for living costs which is not added to their loan.

Student groups, including the New Zealand Medical Students Association, are also angered by these plans saying that it is unfair to those completing longer degrees and may discourage students from entering those degrees including medicine which is a minimum of eight years.

“We have grave concerns that the seven-year cap on student loans and now this four-year cap on access to student allowances may force students to take out high-interest bank loans to live, which will reduce access to tertiary education for many students and is unreasonable,” says NZMSA President Michael Chen-Xu.

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