National offers lower student-loan deductions at home and tougher penalties offshore

Summarised by Centrist

National says it will cut the compulsory student-loan repayment rate for New Zealand-based borrowers from 12% to 10%, while increasing penalties and enforcement for borrowers who leave the country.

The domestic change would begin on 1 April 2027 and apply to income above the current $24,128 threshold. It would improve take-home pay but extend the time interest-free loans remain on the Crown's books.

National estimates an accountant earning $75,000 would keep about $1,000 more a year, while a junior doctor earning $100,000 would retain about $1,500. A worked example in the policy document shows an engineer with a $65,000 loan taking roughly two extra years to clear it.

The repayment reduction is costed at $438.6 million over five years, including a one-off $283.3 million revaluation of the existing loan book.

For overseas borrowers, National proposes adding one percentage point to the annual interest rate, introducing tiered penalties for sustained default, using permanent-migration KiwiSaver withdrawals to clear outstanding loans, lowering the threshold for border arrest warrants, and allowing Inland Revenue to place a charge over New Zealand property without first obtaining a court judgment.

The party says 114,724 borrowers were overseas at 31 March and accounted for $2.5 billion, or 93%, of overdue student-loan debt. It proposes spending another $10 million a year on overseas enforcement, which National expects to generate $25 million in additional collections, or $15 million after enforcement costs.

Read more at 1News and in National's policy document

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