Greens' policy allows graduates to defer loan repayments for home deposit

  • 25/11/2016
The new policy aims at helping young people achieve the white picket fence dream faster (Getty)
The new policy aims at helping young people achieve the white picket fence dream faster (Getty)

By Chris Holden

The Green Party has announced a policy which would allow student loan borrowers to defer paying it back and save for a house instead.

Under the policy, borrowers earning over the repayment threshold of $19,000 per annum will be able to defer their mandatory 12 percent student loan repayments into a housing deposit savings account.

Green Party tertiary education spokesperson Gareth Hughes says "this will give people the option of saving for a home deposit now and paying off their student loan once they have secure housing."

"Many New Zealanders struggle to save for a first home deposit, particularly when 12 percent of their income before tax goes on compulsory student loan repayments," Mr Hughes says.

"Helping young people into homes will also encourage [students] to stay in New Zealand, improving student loan repayments in the long run."

But ACT leader David Seymour has slammed the policy as a "total money-go-round."

"The fundamental problem which the Green Party has failed to identify is many new homeowners will be unable to service a mortgage when the student loan repayments recommence," Mr Seymour says.

"Banks are also not stupid and will likely require a higher deposit or increase interest rates."

"The fundamental problem with the housing crisis is the lack of supply."

National MP Brett Hudson is also critical of the policy, and tweeted "saving money by not paying your bills is not a good basis for public policy."

Currently more than 700,000 people have a student loan registered with Inland Revenue which amounts to more than $15 billion in debt.