Student loans are increasing despite fewer borrowers

Fewer higher education students accessed student loan program funds last year, but the amount they borrowed increased.

Meanwhile, over the past three years, amounts written off due to bankruptcy have increased 114 percent to nearly $6 million.

The Student Loan Program’s annual report indicates that $1.4 billion was borrowed through the program, an increase of 0.4% from 2022.

The report shows that 120,918 students borrowed under this program, down 6.8 percent.

Students used about just over half (57%) of the total they borrowed to pay their course fees.

At the same time, loan repayments were similar over the last financial year, but overdue repayments increased by $200 million, with overseas-based borrowers owing the majority of the debt.

The report said defaults by foreign borrowers also account for a growing amount of overdue repayments.

As of June 30, just over 70% of overseas-based borrowers owed 92.6% of total outstanding student debt.

The report says this is a continuation of a long-term trend, and those who stay in New Zealand are more likely to repay their loan in half the time.

“Whether a borrower stays in New Zealand or goes overseas makes a significant difference in expected repayment times. Half of borrowers who stay in New Zealand can expect to repay their student loans within 5.2 years, while three-quarters can expect to repay within 5.2 years. 9.1 years old.

“For borrowers who spend time abroad, half can expect to take 11.0 years to repay their student loan, while three-quarters can expect to repay within 18.6 years .”

In the year to June 30, $5.7 million was written off due to 151 people going bankrupt, more than double that in 2022/23, when $2.5 million of Loan debts were written off for 76 people.

In 2021/22, 34 people filed for bankruptcy and lost $0.05 million due to bankruptcy (although $0.56 million was written off, resulting in a net negative write-off of $0.06 million dollars).

As of June 30, 2024, 52,368 borrowers have fully repaid their loans. The report states that between April and June 2024, Inland Revenue returned to using a range of approaches to improve compliance and reduce refund arrears. This resulted in an additional 10,500 customers meeting their obligations and a $13.6 million reduction in outstanding debts.

More than 934,000 borrowers have fully repaid their loans since 1992, when the program launched. The average amounts borrowed per year have since increased, from $282 to $11,508.

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