Student loan changes confirmed

The Government denies changes to the student loan and allowance scheme will force graduates overseas.

From next year, graduates will have to pay their loans off at 12 percent rather than 10, the threshold for student allowances will be frozen at the current rate and no one will be able to access an allowance after four years of study.

Tertiary education minister Steven Joyce rejects opposition claims the changes will simply see Kiwis leave the country in droves.

He says the the fact loans are interest free is an incentive to stay in the country.

The parental income threshold for student allowances will be frozen as is, no one will be able to access allowances after four years of study and the government's considering axing the loan repayment bonus.

"In the short term it will look like a small tax increase for those people but they will pay off their loan four or five months more quickly."

Mr Joyce's office says the rule change will also apply to former students who may consider leaving the workforce and seek further education.

It means if they've previously received a student allowance for four years they won't be eligible to have one when they undertake new studies.

New Zealand Union of Students' Associations president Peter Hodkinson believes weak economic conditions are being used as an excuse to deny people education.

He says now's not the time to make education more expensive - but to expand access so that people are getting skills for when there are jobs for them.

Photo: NZ Herald