Fewer students but more student debt in 2015/16 year
Student loan debt has grown more than $500 million in the last year despite fewer people completing tertiary qualifications.
Overseas borrowers responsible for $982.6m of debt were "expected not to fully repay their loan", according to this year's Student Loan Scheme Annual Report, released by the Ministry of Education.
Inland Revenue does not hold accurate information on the location of overseas borrowers but the majority are thought to live in Australia.
Deputy secretary of graduate achievement, vocation and careers Claire Douglas said interest on loans for overseas borrowers and $33m in write-offs due to death or bankruptcy affected the nominal value of loan balances, now $15.3 billion.
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Borrowing outpaced repayments by about $400m in the last year, she said.
In the report, the ministry said the $503m rise in loan debt was less than in the 2014/15 year and attributed a 4 per cent decrease in overall student numbers to an improved job market.
However, students were also targeting higher level qualifications: The proportion of borrowers attempting bachelors or higher reached 69 per cent while enrolments in certificates dropped 10 per cent.
Universities New Zealand executive director Chris Whelan said the general drop in enrolments was a "cyclical" reaction to lower unemployment.
The drop in lower level qualifications was people "working out that they have better job security, better pay with a tertiary qualification".
"Many certificates are almost entry level. It's like a driver's licence – you need it to do a job but it doesn't add a premium to what an employer will give you. It's just to get in the door."
He said Government policy changes over the last decade put the emphasis on school leavers, 38 per cent of whom started university within five years of finishing secondary school.
New Zealand Universities Students' Association (NZUSA) president Linsey Higgins said the focus on school leavers discouraged part time and older learners from study.
"There are those who are questioning the value of study and whether it's affordable.
"The message from Government is try borrow as little as you can but it's pretty impossible by the time you pay your fees, which are always increasing."
The annual report said the average amount borrowed per student, per year was now $8888 compared to $7633 in 2011.
Half of domestic borrowers were expected to repay their loans within 6.5 years, a half-year increase on last year's forecast. Overseas-based borrowers had a median repayment time of 17 years.
Higgins said 37 per cent of respondents to NZUSA's own survey said their loans would affect their ability to start a family, with two-thirds saying it would hurt their odds of home ownership.
Overseas borrowers struggling to repay their loans needed to be able to have "a free and frank conversation without prejudice" with Inland Revenue.
"We have had people talk to us who are in awful situations that you just can't predict. They are saying 'I can't make my repayments and I'm scared [of arrest].'"