$100m plan for student debt cuts

By ALAN PERROTT

Tertiary students who work in New Zealand after graduation would have their loan repayments covered for at least three years under a new Progressive Party policy.

Party leader and Economic Development Minister Jim Anderton said the loan policy was aimed at stopping the flow of skilled graduates leaving the country.

"Reducing student debt for students who decide to work in New Zealand will ease the business skill shortage and keep more students home where we need them," he said yesterday.

"Progressive wants to encourage our young people to own homes and raise families in New Zealand."

Under the policy, the Government would cover the standard 10c in the dollar loan repayments for at least three years, although students could add to that amount if they wished to repay their loan faster.

However, students who left the country after graduation would continue to accrue interest on their loans.

Mr Anderton said the party's ultimate aim was for the Government to pick up repayments for 10 years, which should be enough to cover an individual's entire loan.

A spokeswoman for Mr Anderton said, based on student repayments for the past year, the policy would cost about $100 million a year.

Government statistics released last month showed student debt had reached just under $6 billion since the scheme was introduced 13 years ago.

In June, the average loan balance was $14,242, up 4.1 per cent on the previous year.

Student loans are now being repaid in 9.3 years on average.

The Progressives' loan policy is the second to be released over the past week.

On Thursday Mr Anderton announced a proposal to cut the company tax rate from 33 per cent to 30 per cent.

A spokeswoman for Tertiary Education Minister Steve Maharey said he would not to comment on the policies of parties connected to the Labour Government.