New Rules For Student Loans
September 8, 2011 New Zealand Taxation
New legislation has been tabled in front of Parliament, containing measures aimed at improving the rate of repayment on student loans in New Zealand.
On September 7th the Revenue Minister Peter Dunne introduced the Student Loan Scheme Amendment Bill, which aims to tighten the rules applicable for student loan holders. If approved, the legislation will cut down the repayment holidays available to borrowers who are traveling overseas, and will also require borrowers to nominate a contact person when leaving the country.
Commenting on the intentions of the bill, Peter Dunne said, “…essentially, we are cleaning up the whole area around defaulting on student loans and addressing the overall size of student loan debt.”
The Bill will require that loan borrowers who leave the country for an extended period of time, will no longer automatically receive a student loan repayment holiday, and must now apply for one. As part of the process, a contact person will have to be nominated, who will provide the Inland Revenue Department (IRD) with details of the borrowers overseas address, if they are asked. In addition, when a new borrowers apply for a loan, they must also nominate a contact person, as a condition of obtaining a student loan.
Borrowers who are already based overseas will also find that their repayment holiday time limit will be reduced from three years to one year. Peter Dunne said that once a person has lived overseas for more than two years, it is reasonable to assume that they have found paid employment.
The passing of the bill will also see the exclusion of losses from the calculation of annual incomes, for the purposes of student loan repayments.
Photo by Our Lady of Disgrace