Press Release – New Zealand Labour Party
Labour has tabled an amendment to the latest student loan legislation to reverse the government’s decision to reduce the repayment holiday that student loan borrowers can take from three years to one year.Grant
Tertiary Education Spokesperson
28 March 2012 MEDIA STATEMENT
Labour proposes change to student loan repayment law
Labour has tabled an amendment to the latest student loan legislation to reverse the government’s decision to reduce the repayment holiday that student loan borrowers can take from three years to one year.
“The cutting of the repayment holiday by the government makes no sense at all. The advice it has received from both Treasury and the Ministry of Education is that it will not improve student loan repayments. In fact, it is likely to increase debt held by overseas borrowers and therefore discourage them from returning from overseas.
“The three year repayment holiday was introduced by the previous Labour-led government as a pragmatic measure that acknowledged that many young graduates have their OE, with every expectation of returning to New Zealand.
“In this period, borrowers had a holiday from their repayments but still accumulated interest on their loans as any graduate outside of New Zealand does.
“Without any actual evidence to point to improving repayments or reducing debt, the government has gone ahead with a law change to reduce the holiday from three years to one year. As well as not being based on evidence, it is an arbitrary decision to go with one year.
“Labour will put forward amendments to leave the repayment holiday at three years or as a compromise to move it two years, which aligns more closely with the travel patterns of many graduates.
“The Minister in charge of this Bill, Hon Peter Dunne, actually led the legislation through in 2007 that created the three year holiday. He did so because it was a practical approach to ensuring that we did not create a financial barrier to graduates returning from their OE. He needs to find that spirit of pragmatism again and support Labour’s amendments,” said Grant Robertson.