3 May 2012

Changes to student loans announced

8:53 pm on 3 May 2012

The Tertiary Education Minister has announced changes to the student allowance and loans system including an increase in the minimum rate at which loans have to be paid back.

That will increase from 10 cents in the dollar to 12 cents once those holding loans are earning more than about $19,000 a year.

Steven Joyce says students will pay off their loans an average of four or five months faster and will then be able to start saving quicker too.

The threshold for parental income - which is used to assess eligibility for allowances - will be frozen for four years.

Mr Joyce also says the cap on the number of years someone can get a student allowance will be scaled back from five years to four years.

Mr Joyce says the changes will save between $60 and $70 million a year most of which he says will be reinvested in engineering and science education.

On Checkpoint Mr Joyce agreed the increase would cancel out most of National's tax cuts for the average family.