Shake up for student loan scheme

With $7.5 billion worth of unpaid student loans, the Government has made some changes to the scheme in a bid to recover some of the debt, which may affect some Rotorua students.
A Ministry of Education report says students have borrowed $13.9 billion since loans were first introduced in 1992 but only $6.4 billion has been paid back.
A spokeswoman for Tertiary Education Minister Steven Joyce, Anita Ferguson, said many changes had been made to the scheme in this year's budget to help recover some of the debt.
Changes included introducing performance-based loans, introducing a lifetime limit on access to student loans and introducing a new $40 annual account fee which was applied once study was completed to cover more of the actual costs of administration over the life of the loan.
Waiariki Institute of Technology student Sonya Bateson said she agreed with performance-based loans but said she wasn't that concerned about paying her loan back because it was interest-free.
The 21-year-old, who owes close to $10,000 in fees, said she was only concerned about how long it would take.
Miss Bateson said she didn't want to be pressured to pay it back faster and would probably just make the minimum repayments once she had finished studying and landed a job.
However, if she was earning enough she would consider extra payments to pay it off faster.
From January 1, students will be required to pass more than 50 per cent of their full-time courses over two years to be able to keep borrowing from the scheme.
Ministry figures show that about 9500 people would be ineligible to continue borrowing next year because they had not passed the required number of courses.
Tertiary Education senior policy manager at the Ministry of Education Karl Woodhead said the new requirement is expected to save the taxpayer about $40 million a year. But he also said that despite the recession, the amount in overdue repayments by borrowers in New Zealand had reduced significantly.
THE FACTS
- 894,000 people have borrowed $13.9 billion since 1992
- Last year, 71 per cent of students took loans, totalling $1.4 billion
- More females than males take loans, but males borrow more
- Median age is 20 but more older students are borrowing money
- Majority of loans are under $15,000 but 2000 people owe more than $100,000
- Loans worth $10.7 million were written off in the year to last June because the borrowers had died