Treasury has suggested that the Government should use the tax cuts to increase the minimum repayment rate on student loans, correctly noting that there are little incentives o pay back loans faster at 0% interest.
At present, everyone earning more than $18,000 a year must contribute 10 per cent of their earnings to repaying their loan.
Treasury officials recommend new thresholds be set at 12 per cent for people earning more than $40,000 a year and 15 per cent for those on more than $60,000.
Planned income-tax cuts would offset the effect of the increases, the Treasury said.
Sounds sensible to me. It will lead to less student debt, and faster repayment times – both something student associations have complained about.
It recommends an overhaul of the repayment scheme and measures that “could include requiring students to pass a certain number of their courses or limiting the number of years students can borrow for”.
Also sensible. Good bye to life time students.
New Zealand Union of Students’ Associations co-president Sophia Blair called the Treasury suggestions ” ludicrous”.
“This would take much-needed money directly out of the pockets of struggling families,” she said.
This is ironic. I don’t recall NZUSA campaigning for tax cuts to help struggling families who earn above the average wage.