The Government plans to increase pressure on New Zealanders overseas to repay their student loan debt, but Labour fears a scheme that has student loans linked to some courses and not available to others.

Prime Minister John Key said the Government would rein in the student loan scheme "in a big way" while addressing the Colliers International "Research Hits the Road" event in Auckland today - though he committed to keeping them interest free.

He said the scheme was politically popular, even if it "may not be great economics".

"That is about the only thing that will get [students] out of bed before 7 o'clock at night to vote, but it's not politically sustainable to put interest back on student loans. It may not be great economics, but it's great politics.


"It is a bit of a tragedy because it sends the wrong message to young people, it tells them to go out and borrow debt."

Labour's tertiary education spokesman Grant Robertson said Mr Key's comments showed changes on the horizon.

"They've already made restrictions around age, around completion of courses around the length of time that you can do your courses. The next step would seem to be, well okay there are some courses we are not going to fund. That's a very dangerous road to go down."

Mr Robertson said he would be concerned if there was a restriction on the amount students could borrow, based on the courses they took and the employment prospects they had.

Tertiary Education Minister Steven Joyce said the Government was "not necessarily" looking at linking loan accessibility accessibility to particular courses.

"But we want to as much as possible give an indication to people when they make their decision on their tertiary education that they understand what they're likely to earn coming out the other end, based on what people who get that degree or diploma are actually doing."

The Government plans to publish the average income of graduates from specific courses as part of a pilot scheme involving two polytechnics and data matching between the IRD and the Education Ministry.

Meanwhile a bill that would cut the repayment holiday period for student loan borrowers from tree years to one has received unanimous support from parliament's finance and expenditure select committee.


The Student Loan Scheme Amendment Bill would also allow the Inland Revenue Department to access alternative contact details for borrowers to make it easier to track them down, and change the way net income was calculated when assessing student loan repayments.

The committee tweaked the bill to fix a loophole that would have allowed a refund to a borrower who still owed money from a previous period.