Executive Summary

The 2002 Student Loan Scheme Annual Report provides a consolidated view of the Student Loan Scheme for the 12 months ended 30 June 2002, includes information about student borrowing in the 2001 and preceding academic years and brings together information about student loans from the three government agencies responsible for the management of different aspects of the scheme:

• the Ministry of Education, responsible for strategic policy;
• the Ministry of Social Development, through StudyLink, responsible for delivery of loans to students; and
• Inland Revenue, responsible for collecting student loan repayments through the tax system and facilitating interest write-offs for eligible borrowers.

This report also describes the ongoing work being undertaken to improve reporting on the impact of student loans, as recommended in the Auditor-General's June 2000 review of the scheme. This includes a set of audited financial statements.

A data integration project is being undertaken, designed to provide a better understanding of the outcome of having a student loan for the borrower. The first set of data has already been integrated by Statistics New Zealand, which is scheduled to provide its initial results later this year.

Highlights from the report include:

• The average amount borrowed in an academic year has increased from $3,628 in 1992 to $6,058 in 2000 and $6,1353 in 2001.
• 148,174 students borrowed $908.9 million in the 2001 academic year.
• The average cumulative student loan debt owing to Inland Revenue has increased from $5,525 in 1993/94 to $12,643 in 2001/02, compared with $12,497 in 2000/01.
• There were 360,612 borrowers with loans outstanding to Inland Revenue as at 30 June 2002.
• 50% of all borrowers have a loan under $9,069.
• Less than 5% of all borrowers have a loan balance greater than $40,000.
• As at 30 June 2002, 106,918 borrowers had repaid their loans in full since the scheme began in 1992. 17,085 loans were repaid in 2001/02 compared with 16,539 in 2000/01.
• The net total of all loans outstanding as at 30 June 2002 was $4.75 billion.
• The Student Loan Scheme has a provision for doubtful debts, currently calculated at 11.4% of the value of the outstanding debt. At 30 June 2002, the doubtful debt provision was $637 million.
• Since the commencement of the scheme $1.48 billion in interest and principal repayments has been collected.
• The level of overdue loan repayments as at 30 June 2002 was $74.42 million of which 44.6% ($33.2 million) was under instalment arrangement for payment.
• Total interest write-offs recorded in the year to 30 June 2002 were $141.40 million.
• The long-term student loan forecasting model indicates that the estimated marginal economic cost of each dollar drawn down by students from 2002 onwards is 23 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 10.3 years.