The impact of student loan debt
The Student Loan Scheme Annual report 2016/17 released today again highlights the debts many people are forced into to try to get ahead, Education Minister Chris Hipkins says.
The 2016/17 report was tabled in Parliament at 2pm and presents an overview of the Scheme since its inception 25 years ago. The total amount of overdue loan repayments stands at $1.2 billion, up more than 12% on the year before.
The report shows students are leaving study with higher debt and taking longer to pay it off. The average student now borrows around $9,053 per year, has a median debt of $17,780 by the time they leave study, and takes about 7 years to pay off their loans, Mr Hipkins said.
“Fewer students are going on to study at a post-school level. Students are telling us that they have been put off by higher costs and the burden of debt. It is a worrying trend and robbing too many Kiwis of opportunities and employers of the skills they need.
“The Government is making tertiary study more affordable and has already taken the first steps with fees free post-school study or training for eligible people and a $50 per week boost in student allowance and loan living cost entitlements. We expect this will halt and then reverse this trend.
“At the same time the policies will result in a $434 million reduction in government capital spending over the next five years as students borrow less overall. In 2016/17 alone it cost the Government $662 million to lend to students under the loan scheme.”
Mr Hipkins said the changes will mean students studying from 2018 won’t need to borrow as much and will leave study with less debt that they can repay back sooner, and be able to get on with their lives.
The 2016/17 Student Loan Scheme Annual Report is available at https://www.educationcounts.govt.nz/publications/80898/2555/student-loan-scheme-annual-report-2017/