8. ALLAN PEACHEY (National—Tāmaki) Link to this
to the Minister for Tertiary Education
What changes is the Government considering to make administration of the student loan scheme more cost effective?
Hon STEVEN JOYCE (Minister for Tertiary Education) Link to this
The Government is looking to recover more of the $40 million per year it costs to administer the student loan scheme. Currently, only $10 million is recovered from students through the $50 charge per year, which takes place while a loan is being drawn down. That charge has not been changed since 1992. Once borrowers leave tertiary education, they do not pay any of the administration costs of the scheme, at all. It is only fair that borrowers who receive the benefit of interest-free loans cover more of the actual costs of loan administration, so more people have the opportunity to participate in tertiary education.
Money currently spent on subsidising student loan administration costs could be freed up to invest back into more places at tertiary institutions. This year we are funding a record number of student places in New Zealand tertiary institutions, but this is currently projected to decline next year, partly as a result of the previous Government’s projection for student numbers to fall as a result of the global economic recession. Final decisions will be detailed in the Budget later this month.
Hon Maryan Street Link to this
How does he reconcile the addition of a $50 fee on any person with a student loan with last year’s Government legislation offering a 10 percent bonus on any additional loan repayment of $500 or more—which is about $50 in my maths—or is the Government seeking to recover the cost of its own legislation by giving with one hand and taking away with the other?
I think that 10 percent of a student loan repayment could be any amount of money; it depends on who pays it back. I think it is entirely fair, though, that the administration—