By political editor Duncan Garner
Half a million students with interest-free student loans will be forced to pay back more of their loan once they start working under new tax measures outlined by the Government today.
The move is effectively a tax increase or, as Labour put it today, a pay cut.
Students in Otago seemed thankful today about one thing – loans remaining interest free.
But the changes mean a tax increase for the 500,000 students with interest-free student loans.
“In the short term they are going to pay more of their student loan,” says Tertiary Education Minister Steven Joyce.
“This is a pay cut for students,” says Labour deputy leader Grant Robertson.
Currently students pay 10 cents in the dollar towards repaying their loan.
It will rise to 12 cents next year, once they earn above the current threshold of $19,000.
It will save the Government about 70 million a year. Mr Joyce says it will reinvest the savings in education.
“We think two cents is about right,” he says. “It is quite significant at higher income levels."
It means if you are earning $25,000, you'll pay an extra $2.27 per week.
If you earn $38,000, the Government will take an extra $7.28 out of your take-home pay.
At $70,000, you'll lose almost $20 a week from your take-home pay every week.
Labour is critical.
“They're sending a message to graduates,” says Mr Robertson. “Go and cast yourself for The GC because that's impact - sending people to Australia.”
Student allowances will also be limited to the first four years of study, which means thousands of post-graduate students are set to lose out.
“We'll just make it for four years, and otherwise get a student loan,” says Mr Joyce.
“I think it's a shame we rely on the allowance to get us through uni,” says student Sam Sharp.
“It's important to have those support structures in place so we can study,” says student Tarsh Turner.
National is also ditching the voluntary repayment bonus for student loans, worth $12 million, an incentive for students to pay off their loans faster. But it hasn't worked, and students have thumbed their noses at the idea.
So now National is forcing them all to pay more as it embarks on the traditional early-dumping of bad news ahead of the May 24 Budget
source: newshub archive