Government will chase student loans - Key

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Tue, 17 May 2011 11:55a.m.

The Prime Minister is confident Thursday's Budget will reduce the country's deficit

The Prime Minister is confident Thursday's Budget will reduce the country's deficit

Prime Minister John Key says chasing up unpaid student loans is a step in the right direction for the country’s finances.

It’s taken three years for the Government to start actively trying to recover unpaid loans.

Mr Key puts the delay down to a combination of IRD loan administration systems which “haven’t been that great” and earlier advice from officials that said chasing the loans wouldn’t be worth it financially.

Speaking to Firstline this morning, Mr Key said it was time to start “aggressively” trying to recover unpaid student loans from New Zealanders living overseas.

"We do have to address this, and address it very seriously," he said.

Student loans in New Zealand take, on average, 4.6 years to pay back. Once someone travels overseas, that jumps to 14 years.

While regaining student loans will save several million over the next four years, it’s a small amount compared to the $300 million the country currently borrows each week to make up the projected $15 billion deficit.

Mr Key is confident the deficit, which he says is a result of the global financial crisis and Christchurch earthquakes, will decrease as a result of this week’s Budget.

"The economic position is improving both in New Zealand and globally,” he said.

“We're very confident that deficit will evaporate and we'll return to surpluses, and that's a good news story for New Zealand."

While he refused to go into numbers, saying that was for the Minister of Finance to announce on Thursday, he promised the deficit would drop “very, very rapidly”.

“As you get into the new financial year, the deficit is reduced heavily.”

Mr Key says that while he doesn’t expect Finance Minister Bill English to “drop any clangers” in Thursday’s budget, New Zealanders will have to be prepared to accept the necessity of budget cuts.

“What you see is what you get. We don't have a lot of money, we do have to put more money in health and education, we do have to pay $5.5 billion towards Christchurch, and we've got to find that money from somewhere else."

Watch the video for the full interview.

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Comments

18 Aug 2011 08:06p.m.

natasha wrote:

I left New Zealand so that I could pay off my student loan which I would not have been able to do if I had stayed in New Zealand.

18 May 2011 08:35p.m.

Abin wrote:

In our economy which is pretty much unstable we should give them also the credit that they are doing something. But I guess students who are also getting their student loans should know how they are going to spend their money wisely so that they will not regret it in the end. Here’s a great article relating interesting information that compares different college majors and how long it takes to pay back <a href="http://privatestudentloan.org/does-your-major-suck-how-long-itll-take-to-pay-off-your-student-loans/">student loan</a>.

17 May 2011 04:54p.m.

papa bear wrote:

the tax cuts for the rich was costed at $15 billion over 4 years, the gov't should reverse the cuts that were unaffordable and abuse of power. they got a grand a week
and we got a gst rise that put cost of living up when many can't eat now. nat gov't would be voted out anywhere else in the world. come on kiwi ,show some balls.

17 May 2011 02:13p.m.

josh wrote:

I have to admit, I'm a little sceptical that a $15 billion can evaporate 'very rapidly'. Sounds like asset sales to me. What else could it possibly be..? TBH, I'd rather have our government in $15 billion debt than have to pay more on power bills I can hardly afford to pay. I'm a student living on $166/week, and I'm telling you now: if the government is picking up the tab, and base living costs become private, *expect* the price to rise.

17 May 2011 01:45p.m.

Chris wrote:

"which he says is a result of the global financial crisis and Christchurch earthquakes..."

No, the deficit is a result of vote-grabbing tax cuts and the continual erosion of the low and unskilled job market in NZ. The reconstruction of Christchurch will actually provide much needed stimulus to our economy....if the muppets at EQC will just let us get on with it.

17 May 2011 01:43p.m.

John. wrote:

If they won't pay the government should invalidate their passport & let the relevant embassy know. The debtor would be forced to return to NZ, losing their job that they got as a result of a unpaid for degree, & could then be taken to the cleaners mercilessly by the IRD like they deserve. It's up to the individual how they're treated, but not paying is not an option.

17 May 2011 01:15p.m.

Alex wrote:

Here's to leaving the country and not paying back my student loan, just out of principle.

17 May 2011 01:15p.m.

dawn b wrote:

Katrina... Thats not action, so far thats just some words.

17 May 2011 01:09p.m.

jj wrote:

What is he going to jet around the world as a bailiff and take 20 body guards with him.The poofter would run a mile if chased by a pitbull.Katrina you should go with him,to hold his hand.

17 May 2011 12:17p.m.

katrina wrote:

Well done, good to see some positive action.