Student Loan Scheme Annual Report 2004

Publication Details

The Student Loan Scheme Annual Report for the financial year ending 30 June 2004, incorporating the financial report to 30 June 2004. 2004 is the thirteenth 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 2004.
  • 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, outstanding debt, borrowers overseas, long-term debt projections, interest write-offs and capital write-offs due to bankruptcy or death.
  • a fair valuation of the scheme, developed by the actuaries working for the agencies that manage the scheme.

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

Date Published: October 2004

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This report is available as a download (please refer to the 'Downloads' inset box).  For links to related publications/ information that may be of interest please refer to the 'Where to Find Out More' inset box.

Executive Summary

There are significantly expanded statistics that use information from the integrated dataset on Student Loan Scheme borrowers. These include, for example, information on repayment and income.

Key findings from this year's report are listed below.

Number of Borrowers and Debtors

  • In the 1992 academic year, there were 44,202 borrowers. In 2000, there were 128,107. This grew in the 2002 year to 150,575 in 2002 and in 2003 to 156,250. The increase between 2002 and 2003 was 3.8 percent.
  • The total amount borrowed in the 2003 year was $987 million, compared with $934 million in 2002 and with $909 million in 2001.
  • About 60% of eligible students borrowed through the Student Loan Scheme in 2003, compared with 57% in 2002 and 50% in 1999.
  • There were 418,761 borrowers with loans outstanding at 30 June 2004, compared with 390,027 on 30 June 2003 and 360,612 a year earlier.

Amounts Borrowed and Levels of Debt

  • The average amount borrowed in an academic year increased from $3,628 in 1992 to $6,058 in 2000.
  • The average student loan balance has increased to $14,242 on 30 June 2004, an increase of 4.1% on the 2002/03 average balance of $13,680.
  • The median student loan balance on 30 June 2004 was just under $10,000.
  • Less than 6% of all borrowers have loan debt over $40,000. 345 of the 419,000 people with a loan balance have a student loan debt of $100,000 or more. This represents less than 0.1% (actual 0.08%) of all borrowers.

Repayment Times

  • The forecast average repayment time is 9.3 years, compared with an expected repayment time of 9.6 years in 2003 and 10.3 years in 2002. The median repayment time is less than 8 years. Three quarters of all borrowers can expect to repay within 12 years.
  • The main reason for the reduction in forecast repayment times since 2002 is the forecast of future borrowing levels.
  • Female borrowers have an expected repayment time of 10.8 years and males 7.2 years.

Interest Rates

  • The interest rate applying to borrowers in the 2003/04 year was 7%, comprising a base component of 4.2% and an inflation component of 2.8%. In 2004/05, the base component is 5.5% and the inflation component is 1.5%. The total interest rate has been capped at 7% since 2000.
  • Total interest write-offs recorded amounted to $208 million in the year to 31 March 2004, comprising:
  • $107 million in full interest write-offs;
  • $ 71 million in base interest write-offs;
  • $ 31 million in base interest reductions (ie the "50/50" rule).
  • This compares with an interest write-off in the year to 31 March 2003 of $128 million and with $168 million in the previous year.


  • As at 30 June 2004, 141,471 loans have been repaid in full since the scheme began - 18,002 were repaid in 2003/04. The amount of money collected by Inland Revenue in interest and principal repayments since the scheme began is $2.317 billion, of which $447 million was collected in 2003/04.
  • Loan repayments are being made at a satisfactory rate. Around a quarter of all loan debt incurred since the scheme began has been repaid.
  • By the middle of the next decade, repayments each year are expected to exceed drawdowns
  • The level of overdue loan repayments at 30 June 2004 was $139 million of which 28% was under installment arrangement for payment. The level of overdue loan repayments a year earlier was $101 million.

Borrowers Overseas

  • There is no evidence that significant numbers of borrowers are going overseas to escape repaying their loans. Inland Revenue records show that 6% of student loan borrowers were overseas at 30 June 2004. Non-resident borrowers owed around 8.5% of all of the loan scheme debt. About 45% of those overseas are recorded as having overdue loan repayments. This represents 58% of all overdue loan repayments.

Value of the Loan Debt

  • The total of all loans outstanding as at 30 June 2004 was $5.995 billion, net of a doubtful debt provision of $826 million. The total at 30 June 2003 was $5.370 billion.
  • A new fair valuation of the scheme has been made and is included in the annual report, as well as in the Crown's accounts to 30 June 2004. The fair value of the scheme is $5.734 billion or 84.1% of all outstanding debt. This compares with a fair value of $5.592 billion or 91.8% of face value on 30 June 2003.
  • The projected total of outstanding debt for the year 2014/15 is $13 billion. This is slightly higher than the forecast made a year earlier ($12.5 billion). The main reason for the higher forecast is the expected movement in such economic indicators as the CPI.
  • From 2015, it is expected that repayments each year will exceed drawdowns. The annual rate of increase in the total of all debt will reduce to about 2.5% by 2020.


  1. These figures exclude debt drawn down by students in the current year and not yet transferred to IRD.

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