Pacific students' interest deal helps

Changes to student loan legislation could ease financial pressure on Pacific Island students returning home who now qualify for interest-free loans.

The Student Loan Amendment Bill, which passed its final reading in Parliament this week, makes student loans interest free to borrowers who live in Niue, Cook Islands, Tokelau or the Ross Dependency for at least 183 consecutive days.

Niuean Sunlou Liuvaie, who settled in Palmerston North after studying at Massey University, said interest-free loans were great news and could play a part in encouraging students to return home.

"Students go back because they have a sense of contribution, [interest-free loans] may help make it a little easier."

Pacific Islanders returning home face lower average incomes.

Taking off the interest would make it easier to repay the loan, Mr Liuvaie said.

The total student loan debt is more than $10 billion.

Mr Liuvaie plans to work in Palmerston North for a while before eventually returning to Niue with the skills he's gained.

Revenue minister Peter Dunne said the changes were good news for borrowers from Niue, Cook Islands, Tokelau or the Ross Dependency.

"[It] will encourage people from these countries, which share a special relationship with New Zealand, to return home and contribute to their countries' futures."

Loans of students on recognised student exchange programmes will also be interest free under the amendment.

"This is another positive step that will allow people to further their studies overseas in a way that will benefit New Zealand in the longer term," Mr Dunne said.

But it wasn't all good news for borrowers.

Student loan repayments will be increased from 10c to 15c in the dollar for borrowers who missed or failed to make payments.

- © Fairfax NZ News