Labour: work in the regions and we will pay a chunk of your student loan

Andrew Little said the details of any scheme were yet to be established. Photo / Mark Mitchell

People who take certain public service jobs in the regions would have a chunk of their student loan wiped, under policy being developed by Labour.

Prime Minister John Key has dismissed the idea, saying it was more important to build up regional jobs and infrastructure.

That is despite Government setting-up a similar bonding scheme for new graduates in health, teaching and veterinarians in 2009, with annual payments of more than $3000 going towards student loans.

Labour leader Andrew Little said the details were yet to be established but if people worked in a job outside of the main cities for an agreed time, taxpayers could pick up the bill for some of their student loan.

It would be a major policy and follows on from Labour's pledge to fund three years of post-school study for every New Zealander without a previous tertiary qualification.

Speaking to Victoria University student radio station Salient FM this week, Little said people had asked what Labour would do for those with existing student loans.

"We know that is an issue too. I don't have any particular promise to make, but an issue that we are looking at is ways we can assist students to effectively write-off at least a part of that student debt.

"So you take a public service job somewhere outside one of the main centres for the length of period that you are there, let's look at a write-off regime. It's an idea we are considering at the moment."

In January, Little announced in a State of the Nation speech in Auckland Labour would provide three years of post-school study for every person in the country without a previous tertiary qualification.

Currently around 180,000 people attend university.

Labour said it expected a 15 per cent uptake in tertiary study as a result of the policy which also included polytechnic courses and apprenticeships.

In his speech, Little said the $1.2 billion policy would come from cash earmarked for tax cuts, but would not be fully implemented until 2025.

The Government introduced a voluntary bonding scheme in 2009 to retain and direct new graduates in health, teaching and veterinarians into communities that had workforce shortages.

The scheme paid teachers in eligible schools $3500 before tax per year, for up to five years. The payments went towards paying down student loans for those with them.

Since 2013, teachers are only eligible to enter the scheme if they begin their first teaching position in a decile 1 or severely isolated school.

There are 30 places each year for veterinarians working with production animals.

Tertiary Education, Skills and Employment Minister Steven Joyce said that scheme was very targeted. Any significant expansion was unfair, he said.

"Most people pay [student loans] back within about six years...a lot of people work in the regions right now that are happily working and paying off their student loan debt. I think they would find it very unfair to have other people get their student loan debt wiped."

Green Party co-leader Metiria Turei said she supported the policy idea.

"Green Party policy has been about wiping student debt, partly through bonding and partly through other measures, for a long time. So it's great they are thinking about it."

Auckland's housing crisis has seen the Government try to steer people to the provinces through special grants of up to $5000 for state house tenants and homeless who want to move out of Auckland.