Faster student loan repayments

Treasury has suggested that the Government should use the tax cuts to increase the minimum repayment rate on student loans, correctly noting that there are little incentives o pay back loans faster at 0% interest.

At present, everyone earning more than $18,000 a year must contribute 10 per cent of their earnings to repaying their loan.

Treasury officials recommend new thresholds be set at 12 per cent for people earning more than $40,000 a year and 15 per cent for those on more than $60,000.

Planned income-tax cuts would offset the effect of the increases, the Treasury said.

Sounds sensible to me. It will lead to less student debt, and faster repayment times – both something student associations have complained about.

It recommends an overhaul of the repayment scheme and measures that “could include requiring students to pass a certain number of their courses or limiting the number of years students can borrow for”.

Also sensible. Good bye to life time students.

New Zealand Union of Students’ Associations co-president Sophia Blair called the Treasury suggestions ” ludicrous”.

“This would take much-needed money directly out of the pockets of struggling families,” she said.

This is ironic. I don’t recall NZUSA campaigning for tax cuts to help struggling families who earn above the average wage.