Student Loan Scheme Annual Report 2001

Publication Details

The Student Loan Scheme Annual Report for the financial year ending 30 June 2001, incorporating the financial report to 30 June 2001.

Author(s): Ministry of Education, Inland Revenue, and Work and Income New Zealand.

Date Published: December 2001

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Executive Summary

The purpose of this report is to provide a consolidated view of the Student Loan Scheme for the period ended 30 June 2001.

The Student Loan Scheme Annual Report for 2001 brings together information from the three government agencies involved in the management of the Scheme.

The Scheme was introduced in 1992 with the objective of assisting students to overcome financial barriers to undertaking tertiary study.

During the 10 years that the Scheme has been in operation, the number of people enrolling in tertiary studies has increased, including groups with traditionally lower participation rates in tertiary education. Refer to pages 6 and 20–22 for further information.

The Government has been working to improve financial reporting requirements around the Scheme. Work has been done to clarify responsibilities and improve the information available to the public. A number of steps have been taken to address the key recommendations of the Controller and Auditor General's June 2000 review of the Scheme. These actions are set out in the introduction to this report (page 5). Further work is ongoing to address remaining issues.

Highlights from the report include:

  • The average amount borrowed in an academic year has increased from $3,628 in 1992 to $6,222 in 2000 and the average cumulative student loan debt owing to Inland Revenue has increased from $5,524 in 1993/94 to $12,496 in 2000/01. Higher borrowing is partly due to the increases in student fees over these years.
  • There were 314,280 borrowers with loans outstanding to Inland Revenue as at 30 June 2001, with loans under $20,000 making up nearly half of the total value of all student loans. Loans over $100,000 make up less than 1% by value of the total student loan portfolio.
  • As at 30 June 2001, 81,180 borrowers had repaid their loans in full.
  • The interest rate applying to borrowers in the 2000/01 year was 7%.
  • The total of all loans outstanding as at 30 June 2001 was $4.1 billion, net of a doubtful debts provision of $511 million.
  • Since the commencement of the Scheme, Inland Revenue has collected $1.136 billion in interest and principal repayments.
  • The level of overdue loan repayments at 30 June 2001 was just over $53 million of which 48.5% was under instalment agreement for payment.
  • Total write-offs recorded in 2000/01 were $197 million, including base interest write-offs for the 1999/00 income year and the increased amounts written off due to the introduction of changes to the interest write-off policy.

Current assumptions used in the long-term forecasting model indicate that the estimated marginal economic cost of each dollar drawn down by students from 2001 onwards can be considered to cost the Crown 21 cents, taking into account the time value of money and the cost of loans written off due to death and bankruptcy. Forecast overall average loan repayment times are estimated at just over nine and a half years.

The Student Loan Scheme Financial Report for the year ended 30 June 2001 included in this Report is not presented in the form of standard financial statements and consequently an audit opinion has not been sought. It is intended that the nature of the report will be changed in future years to allow an audit opinion to be expressed on the Financial Report. As an interim measure, Audit New Zealand were asked to carry out a review of the Report, including the Financial Report to 30 June 2001 and a copy of their Report is included on pages 29-30.

Details of the consolidated financial transactions for the 2000/01 and earlier years are set out in Appendix 1 to this Report.