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Revenue Minister Peter Dunne says legislation passed by Parliament last night will make it easier for the Government to manage and reduce the overall size of student loan debt by making borrowers more accountable for repaying their loans.
“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,” Mr Dunne said.
The changes introduced in the Student Loan Scheme Amendment Bill to improve the rate of repayments by borrowers include:
• reducing the repayment holiday for borrowers who go overseas from three years to one year, and requiring them to apply for the repayment holiday and provide a contact person at the same time;
• removing the ability for New Zealand-based borrowers to offset losses against their income to reduce their liability for student loan purposes; and
• ensuring that Inland Revenue receives from StudyLink details of a borrower’s alternative contact person. Borrowers must now provide this information when applying for a loan.
“New Zealand’s student loan scheme is a generous one but one that comes at a considerable cost for taxpayers. It is important that the Government takes all necessary steps to improve the value, efficiency and fairness of the scheme,” Mr Dunne said.
“The new rules are a reminder to borrowers that a student loan is subject to the same responsibilities and obligations as any other substantial financial loan assistance – that is, it is a loan and it must be repaid.”