The threshold at which student loan holders are required to begin making repayments will remain at $19,084 for the 2010-11 year. The threshold is subject to an annual review, and typically is adjusted according in correspondence to the September consumer price index. The threshold is expected to be reviewed again for the 2011-2012 year.

Commenting on the decision, Peter Dunne said “While the impact on individual borrowers is likely to be minimal, the effect of maintaining the current repayment threshold is expected to lower the overall costs of the scheme to the Crown and is the right decision for the times”.

According to the the Student Loan Scheme 2009 Annual Report, as at June 30th, the nominal value of loan balances was NZ$10,259 million, over 562,000 borrowers.

Photo by nznationalparty

The Student Loan Scheme (Exemptions and Miscellaneous Provisions) Amendment Bill was tabled in Parliament on the 4th of August. Revenue Minister Peter Dunne emphasized the need for an efficient and consistent student loan system, as the current student loan amount has reached $9.6 billion, and currently has over half a million borrowers.

Changes introduced into the system include the allowance of residence of Niue, the Cook Islands, Tokelau or the Ross Dependency to utilize the interest free aspect of the student loans. This provision extends to those who are eligible to reside within those territories for 183 consecutive days. Thos wishing to pursue further studies in other countries will also be able to use the interest free element, provided New Zealand and the recipient country have a pre-arranged formal study exchange agreement. Those who are returning to New Zealand and repaying their student loans in less than 183 days will also be eligible for an interest write off. There has also been an allowance for Inland Revenue to increase their standard repayment deduction rate from 10 percent to 15%.

In an effort to increase the ease with which student loan borrowers can access information in regards to their loans, and subsequently improve payment, the Government has proposed a number of changes to the Student Loan system.

The proposed changes are outlined in a discussion document published by the government. The comments are to be submitted via an online forum, and unlike typical submissions are expected to be informal comments by current borrowers.

Proposed changes include the removal of the traditional end of year annual assessment and migrating to a pay-period system, whereby student loans are paid depending on the earners pay period (be it weekly, fortnightly or monthly). The earnings threshold is calculated the same way.

The online discussion forum can be found here.
The discussion document can be found on the Inland Revenue Publication website, here.

The new bill will see a 10% bonus to student loan repayments that are made voluntarily and amount to over $500 per year. These changes also come into effect for those that are based over-seas. The Bill is scheduled to be enacted by the end of 2009, although provisions have been made within it to account for payments that are made after the 1st of April 2009.

The 10% will count to any extent above $500, even to the full balance of the loan. This can either be utilized in the sense of 10/11 of the loan being paid and the last section being paid as a credit at the end of the year, or the loan can be paid in full and the remaining 10% can be credited back at the end of the year.