Making it simpler for student loan borrowers

Legislation that will simplify and modify the way our student loan repayments are administered is to be introduced into Parliament.

Last week, the National-led Government gave Revenue Minister Peter Dunne the sign off to introduce the legislation - which will speed up, streamline and modify the administration of student loan repayments.

The proposed changes have been through extensive consultation, with the Government taking into account the views of thousands of New Zealanders who had their say through an online forum and written responses to a government discussion document.

One of the over-riding themes that came out of this consultation was the idea of Inland Revenue moving away from a paper-based management system towards an electronic system.

Also, the New Zealand public said that they disagreed with one proposed change that would see loan repayments deducted from their holiday pay if they earned more than $367 a week.

The Government has listened and this change has been rejected, which means that full-time students who earn less than $19,084 will not have to make loan repayments while they are studying.

Changing the way our student loans are administered will not only make it easier for New Zealanders to repay their loans, but it also allows our future leaders to work while studying, without being penalised.

Other main features of the reform include an enhanced online service, which will make it easier for students living overseas to make repayments, and also change the system in New Zealand to allow repayments to be deducted through the PAYE system - meaning there will be no more end-of-year assessments.

Also, the late payment penalty, which is currently equivalent to 19.56 percent a year, will be replaced with a late payment interest rate of 10.8 percent a year for borrowers based overseas, and 6.8 percent for those living here.

Today's students all have the ability to become tomorrow's leaders and it is important that they are able to focus on their studies.

These changes to the student loan scheme make it easier for those who need to borrow to achieve.

The changes will be incorporated into a bill to be introduced later this year and are expected to become law on 1 April 2011.