The average student loan balance is close to $21,000. Almost 731,800 people have a student loan. In the year to June 2016, 40,695 borrowers repaid their loans in full.
Course fees are the main cost – more than 90 per cent of students borrow in order to pay their fees. The second largest driver of costs is the cost of living. Overall, students are leaving university with an average of between $16,600 and $17,220 of debt and the average time it takes a graduate to repay their loan is now a whopping 8.4 years.
Record amounts of student debt are being written off for bankruptcy, with $17.6m wiped from the books in the 2015-16 year alone. According to IRD, more than 100,000 student loans are in default, with about 80 per cent belonging to people living overseas.
$150,221 was repaid after eight arrest warrants were sought to prevent debtors leaving New Zealand. After three court cases, $79,610 was recovered – but only from two borrowers. The third person’s debt was wiped due to hardship. Twelve more cases covering $621,955 of debt collection were still under way, an Inland Revenue spokesman said.
Minister, Judith Collins described the threat of arrest as a “strong deterrent” but the New Zealand Union of Students’ Associations (NZUSA) president Jonathan Gee says a new repayment model for student loans is needed. Graduates in New Zealand feared taking on extra debt to own cars or houses and Kiwi expats were scared to come back home, he said.
When asked if other methods of debt recovery were being considered, Collins said reduced repayment holidays, information-sharing arrangements with the Australian Taxation Office and arrests of the worst overseas borrowers since 2010, had demonstrated success.
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