Labour to scrap student loan interest for NZ residents

Helen Clark

The Government will scrap interest payments on student loans held by people living in New Zealand, Prime Minister Helen Clark announced today.

She said the proposed change, which would begin on April 1 next year, would massively reduce loan repayment times.

The policy would cost $100 million in its first year, eventually rising to $300 million a year.

Helen Clark said the policy would form the second of Labour's seven pledge card election promises.

Labour's first pledge card promise is to widen the rates rebate scheme.

National last week unveiled it plan to give tax rebates on student loans, which it said would significantly reduce the time it takes to pay the debt back.

Their policy is centred on making the interest payments on student loans tax deductable.

Deductions would be made automatically by Inland Revenue, which would credit the money to the person's loan balance.

National said the policy would apply from April next year.

"This measure will facilitate a more rapid repayment of student loans by working New Zealanders," leader Don Brash said last week.

- NZPA, HERALD STAFF