Student Loan Scheme Annual Report 2007

Publication Details

The Annual Report for 2007 provides information on the scheme and those who borrowed from it in 2006, as well as the financial schedules for the fiscal year to 30 June 2007.

Key findings in the report are:

  • The nominal value of loan balances was $9.413 billion as at 30 June 2007
  • 167,000 students borrowed from the loan scheme in 2006 (56% of eligible students)
  • As at 30 June 2007 499,000 people had a student loan
  • The median repayment time for those who left study in 2003 and remained in New Zealand is forecast to be 6 years.

Author(s): Ministry of Education

Date Published: November 2007

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Executive Summary

2006 was the fifteenth year since student loans first became available and the year which introduced interest-free student loans.  This year's report provides a comprehensive picture of the Student Loan Scheme to date including:

  • full, audited financial statements to 30 June 2007
  • an overview of the government's policy for student financial support
  • a description of the components of the scheme and how they work
  • extensive statistics about student loans including statistics on loan uptake, loan repayments, interest write-offs and capital write-offs due to bankruptcy and death
  • The fair valuation for the scheme.

New international accounting standards were introduced in 2005 and these changed the way in which we view and value the loan scheme.  New rules relating to overseas borrowers mean that future data will not be comparable with historic data.

Key Findings

Student Loan Scheme portfolio

As at 30 June 2007:

  • The fair value of the loan scheme was approximately $5,443 million. (Refer to chapter 5.3.)
  • The book value of the loan scheme – calculated using International Financial Reporting Standards – was $6,011 million. (Refer to chapter 4.4.)
  • The nominal face value of loan balances was $9,412.7 million. (Refer to chapter 4.4.)
  • 499,259 people had a student loan. (Refer to chapter 4.3.)

Since the loan scheme began: 

  • 712,405 people have used the loan scheme – 21.7 percent of the population aged 15 and over. (Refer to chapter 4.3.)
  • 216,254 loans have been fully repaid. (Refer to chapter 4.4.)
  • Inland Revenue had collected $3,800 million in loan repayments at 30 June 2007. (Refer to chapter 4.4.)
  • $1,842 million in interest charged has been written off. (Refer to chapter 4.4.)

During 2006/07:

Government passed the Student Loan Scheme Amendment Act 2007, which changed the repayment conditions for overseas borrowers and provided a three-year repayment holiday for borrowers who wish to live overseas after study. These changes were designed to remove disincentives and encourage borrowers to return to New Zealand from overseas. (Refer to chapter 3.1.) 

Outcomes of the Student Loan Scheme

  • Research shows that people with tertiary qualifications have lower unemployment, higher incomes and increased wellbeing. (Refer to chapter 2.2.)

From 1994 to 2006:

  • The number of tertiary students (domestic and international) in 2006 was 491,000, compared with 254,100 domestic and international students in 1994. (Refer to chapter 2.2.)
  • The percentage of New Zealanders aged 15 and over who have participated in tertiary education has increased to 13.7 percent – up from 8.9 percent in 1994. (Refer to chapter 2.2.)
  • Enrolments by women in public tertiary education providers have increased by 56.8 percent. (Refer to chapter 2.2.)
  • Enrolments in public providers by Māori and Pasifika peoples have increased by 284.7 percent. (Refer to chapter 2.2.)
  • The number of people with a bachelors degree or higher qualification has increased by nearly 100 percent – from 224,000, to nearly 448,000. (Refer to chapter 2.2.)

About students borrowing from the Student Loan Scheme in 2006 

  • 167,420 students (56 percent of eligible students) took out a loan from the loan scheme. (Refer to chapter 4.1.)
  • There were 60,016 new borrowers. (Refer to chapter 4.1.)
  • The total amount borrowed in the year was $1,099.8 million. (Refer to chapter 4.2.)
  • 93 percent of borrowers borrowed to pay course fees; 62 percent borrowed to help meet course-related costs and 48.5 percent borrowed to meet living costs. (Refer to chapter 4.2.)
  • 23.9 percent of borrowers borrowed to pay for course fees only. (Refer to chapter 4.2.)
  • 12 percent of borrowers borrowed to pay for living costs and received student allowances as well. (Refer to chapter 4.2.)
  • 72 percent of borrowers were under the age of 30 and 3.4 percent were 55 or over. (Refer to chapter 4.1.)
  • 16.7 percent of borrowers identified themselves as Māori, 15 percent as Asian and 7 percent as Pasifika peoples. (Refer to chapter 4.1.)
  • The average amount borrowed was $6,610; the median amount borrowed was $5,663. (Refer to chapter 4.2.)

About those making repayments in 2006 

  • 89 percent were under 45 years of age, 55 percent were under 30, and 5.6 percent over 50. (Refer to chapter 4.3.)

Of those who used the loan scheme between 1997 and 2006

  • About 56 percent were women. (Refer to chapter 4.3.)
  • 48 percent were European, 21 percent were Māori, 9 percent were Asian and 7 percent were Pasifika peoples. (Refer to chapter 4.3.)
  • 42 percent had studied at a university or college of education, 33 percent at a polytechnic and 21 percent at a private training establishment. (Refer to chapter 4.3.)
  • 46 percent had studied at non-degree level, 35 percent at bachelors level and 6 percent at postgraduate level. (Refer to chapter 4.3.)

As at 30 June 2007: 

  • The average loan was $16,833 and the median loan balance was $11,087. (Refer to chapter 4.4.)

During 2006/07: 

  • 15,059 loans were fully repaid. (Refer to chapter 4.4.)

Valuing and forecasting the Student Loan Scheme

  • The median repayment time for those who finished study in 1999 and remained in New Zealand was forecast to be 7 years. (Refer to chapter 5.5.)
  • The median repayment time for those who finished study in 2003 and remained in New Zealand was forecast to be 6 years. (Refer to chapter 5..5)
  • By 30 June 2015, the portfolio is forecast to grow to $16 billion and by 30 June 2020 the portfolio is forecast to grow to $21 billion. (Refer to chapter 5.0.)

Over the next five years:

  • The average annual increase in total borrowing is forecast to be 4.2 percent per annum. (Refer to chapter 5.4.)
  • The average annual increase in the number of loan borrowers is forecast to be 2 percent per annum. (Refer to chapter 5.4.)

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