Steven Joyce, Peter Dunne
6 September, 2012
Student loan valuation increases in 2012
Tertiary Education, Skills and Employment Minister Steven Joyce and Revenue Minister Peter Dunne today welcomed significant progress in reducing the cost of student loan lending.
“We are committed to interest-free student loans, and want a long–term affordable scheme for both students and taxpayers,” Mr Joyce says.
“When Labour took the interest off student loans, the write-off of student loans ballooned out to 48 cents in the dollar.
"When we came into government, we committed to get that cost down, and initially targeted getting it under 40 cents in the dollar.
“I’m pleased to be able to say that changes over the past three budgets have helped reduce that cost from 48 cents to 39 cents in the dollar so far. That's a very significant achievement which reduces the overall write-off cost, and increases the value of the student loan book.”
Mr Joyce said the Government has been tightening the use of the Student Loan Scheme to free up money for reinvestment in the quality of tertiary education, and improve the overall fiscal position.
“We want to ensure student loans are used effectively by people to obtain qualifications and earn enough to pay their loan back and contribute to New Zealand, while we reinvest in the next generation of students.
“In Budget 2012 it was forecast the student support changes would provide a one-off positive revaluation of the student loan book of around $250 million, and $60-$70 million of annual savings, which will be largely re-invested across the wider tertiary system. The student loan valuation at 30 June 2012 has confirmed an actual increase in the carrying value of $286 million,” Mr Joyce says.
Mr Dunne said factors contributing to the increase in valuation include policy changes to tighten lending criteria and increase the speed of repayments.
“There is scope to further increase the value of the Scheme by improving the compliance of overseas-based borrowers,” Mr Dunne says.
“Inland Revenue is currently focusing in this area through its initiative to collect overdue repayments from overseas-based borrowers. To date, the initiative has been successful in contacting and collecting from these borrowers who previously made little or no repayments toward their student loan.”
Mr Dunne said the work began in October 2010 as a pilot targeting 1000 Australian-based borrowers and has been extended to reach 57,000 borrowers, largely in Australia and the United Kingdom.