Student Loan Scheme Annual Report 2006

Publication Details

The Student Loan Scheme Annual Report to 30 June 2006, incorporating the financial report to 30 June 2006. This year’s annual report is the first prepared since the introduction of the new interest-free student loans policy. It was prepared using new international financial reporting standards. Comparisons between the data presented in the 2006 report and information in earlier years’ reports should be made with due care. 2006 is the fifteenth year of operation of the Student Loan Scheme. This report provides a comprehensive picture of the Scheme to date including:

  • full audited financial accounts up to 30 June 2006
  • 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 on the loan scheme including statistics on loan uptake, loan repayments, borrowers overseas, interest write-offs and capital write-offs due to bankruptcy or death
  • the fair valuation of the scheme.

Author(s): Ministry of Education, Inland Revenue, and Ministry of Social Development

Date Published: October 2006

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Executive Summary

Key Findings Student Loan Scheme portfolio

As at 30 June 2006 :

  • The loan scheme was valued at $5,569 million. (Refer to section 4.4.)
  • The gross face value of loan balances was $8,370 million. (Refer to section 4.4.)
  • 470,507 people had a student loan. (Refer to section 4.3.)

Since the loan scheme began:

  • 665,900 people have used the loan scheme – 20.4 percent of the population aged 15 and over. (Refer to section 4.3.)
  • 195,393 loans have been fully repaid. (Refer to section 4.4.)
  • Inland Revenue has collected $3,313 million in loan repayments. (Refer to section 4.4.)
  • $1,283.6 million in interest charged has been written off. (Refer to section 4.4.)

During 2005/06:

  • Government passed the Student Loan Scheme Amendment Act 2005 on 21 December 2005 . This enables Inland Revenue to remove interest on student loans for borrowers and offer an amnesty on student loan penalties for certain borrowers overseas. (Refer to section 3.0.)

Outcomes of the Student Loan Scheme

  • Research shows that people with tertiary qualifications have lower unemployment, higher incomes and increased wellbeing. (Refer to section 2.1.)

From 1994 to 2005:

  • The number of tertiary students (including domestic and international students) has nearly doubled to 504,400 – up from 254,100. (Refer to section 2.1.)
  • The percentage of New Zealanders aged 15 and over who have participated in tertiary education has increased to 14.2 percent – up from 8.9 percent. (Refer to section 2.1.)
  • Enrolments by women in public tertiary education providers have increased by 84 percent. (Refer to section 2.1.)
  • Enrolments in public providers by Māori and Pasifika peoples have increased by 177 percent. (Refer to section 2.1.)
  • The number of people with a bachelors degree or higher qualification has increased by 142 percent – from 195,000 to 471,000. (Refer to section 2.1.)

About students borrowing from the Student Loan Scheme in 2005

  • 154,411 students (40 percent of eligible students) took out a loan from the loan scheme (Refer to section 4.1.)
  • There were 51,443 new borrowers. (Refer to section 4.1.)
  • The total amount borrowed in the year was $971 million. (Refer to section 4.2.)
  • 92 percent of borrowers borrowed to pay course fees; 61 percent borrowed to help meet course-related costs. (Refer to section 4.2.)
  • 24 percent of borrowers borrowed to pay for course fees only. (Refer to section 4.2.)
  • 12 percent of borrowers borrowed to pay for living costs and received student allowances as well. (Refer to section 4.2.)
  • 71 percent of borrowers were under the age of 30 and 2.6 percent were 55 or over. (Refer to section 4.1.)
  • 17.2 percent of borrowers identified themselves as Māori, 12.7 percent as Asian and 7 percent as Pasifika peoples. (Refer to section 4.1.)
  • The average amount borrowed was $6,408; the median amount borrowed was $5,485. (Refer to section 4.2.)

About those making repayments in 2005

  • 58 percent were under 30 years of age, 90 percent under 45, and 5 percent over 50. (Refer to section 4.3.)
  • 23 percent were Māori, 8 percent were Pasifika peoples, 10 percent were Asian and 55 percent were European. (Refer to section 4.3.)
  • 55 percent were women. (Refer to section 4.3.)
  • 39 percent had studied at universities and 32 percent at polytechnics. (Refer to section 4.3.)
  • 52 percent had studied at sub-degree level, 40 percent at bachelors level and 8 percent at postgraduate level. (Refer to section 4.3.)

As at 30 June 2006 :

  • The average loan was $15,883 and the median loan balance was $10,652. (Refer to section 4.4.)

During 2005/06:

  • 16,287 loans were fully repaid. (Refer to section 4.4.)

Valuing and forecasting the Student Loan Scheme

  • The forecast average repayment time has reduced to nine years – down from more than 10 years in 2002. (Refer to section 2.2.)
  • By 2014/15, the portfolio is forecast to grow to $12,700 million in value. (Refer to section 5.0.)
  • By 2034, total repayments are expected to exceed borrowings each year. (Refer to section 4.4.)

Over the next 15 years:

  • The total amount to be borrowed is forecast to increase on average by 4.7 percent (or $66 million) each year.
  • The total outstanding loan balance is forecast to increase on average by 5 percent (or $526 million) each year.


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