By James Murray
Changes to student loans in today’s budget will adversely affect mature and part-time students.
It will also be harder for people to default on loan payments after moving overseas.
Those worrying about having to pay interest though can breathe a sigh of relief – loans will remain interest free.
Finance Minister Bill English says the Government will save $446 million over five years due to the changes, savings that are required to turn a $16.7 billion deficit into a surplus by 2015.
The changes include:
- Restricting student loan eligibility for those with an overdue student loan worth more than $500 who have defaulted for over a year.
- Over-55s will not be able to get student loans to cover living costs, only course-related costs will apply.
- Part-time full year students will not be able to get a loan for course-related costs.
- The repayment threshold will remain at $19,084 until April 2015.
- Every new loan application must have a contact person listed
- Overseas repayment holiday to decrease from three years to one year, borrowers must apply and provide a contact person
- Changing the definition of income for student loan repayment purposes (nothing on what the change may be though)
Tertiary Education Minister Steven Joyce says the changes provide greater accountability for those New Zealanders who go overseas after studying.
“Changes to the repayment holiday provisions signal greater accountability for overseas-based borrowers on their student loans. Regardless of where they go overseas, borrowers must provide a contact person and being repaying their loan once their holiday ends.”
Mr Joyce also linked university funding to performance. Funding in this budget would focus on private training establishments rather than universities and would only “be available to those providers who perform well, and can show they are meeting tertiary priorities”.
Key initiatives are:
- 750 new places in new, high performing private training establishments
- $17.5 million extra for English as a second language courses
- Setting limits on the fees that can be charged to become a pilot and excluding solo hours from the student loan scheme
- A 2 percent increase in funding rate for all degree and post-graduate courses.
- $40 million over four years to raise profile of NZ education overseas
- 40 additional medical student places from 2012
The Government hopes to save $276.6 million in operating funding and $170 million in capital funding over five years.
3 News