National is proposing Kiwis who move overseas and avoid repaying student loans should face tougher penalties - while easing repayments for the graduates who stay.
If re-elected, the party's policy would cut the compulsory student loan repayment rate from 12 cents to 10 cents in every dollar earned above $24,128, from April 1, 2027, finance spokesperson Nicola Willis announced this morning alongside leader Christopher Luxon.
The repayment cut is forecast to cost $438 million over five years, while National expects the tougher overseas enforcement to recover about $15 million a year.
National estimates the repayment cut will cost $438 million over five years, most of it a one-off $283 million write-down of the existing loan book in 2026/27. The party expects the tougher overseas measures to bring in about $15 million a year in net recoveries.
Willis said that, if National were re-elected, the proposed change would let graduates keep more of what they earn early in their careers.
"That is how we keep talent here, as part of our wider plan to fix the basics and build the future," she said, making the announcement from Auckland's Rocket Lab.
"Compulsory student loan repayments are paid at 12 cents on every dollar earned above $24,128. It is often one of the biggest weekly expenses for a young graduate," she said.
"Reducing this to 10 cents means an accountant starting out in their career and earning $75,000 per year would keep an extra $39 a fortnight, or around $1000 a year.
"A junior doctor with a student loan earning $100,000 a year would keep an extra $58 a fortnight, or $1500 a year.
"It means borrowers can repay their interest-free loans over a longer period and keep more of their pay in their back pocket, which can make a big difference when they’re at the start of their careers and earning at the lower end of their profession.
"At the same time, it’s not fair for graduates to take their skills offshore after receiving a heavily subsidised tertiary education, and not try to repay their loan."
National would add 1% to the annual interest charged on all overseas balances, with additional tiered penalties for sustained default, on top of existing late payment interest.
Meanwhile, overseas-based borrowers who withdraw or transfer their KiwiSaver under the "permanent migration" test would have those funds used to clear any outstanding student loan before the money is released.
The party would also look to lower the threshold for a border arrest warrant, so a warrant could be sought for serious, sustained default without needing to prove a borrower knowingly refused to pay.
"National’s Back Pocket Boost for Graduates will reward young graduates who choose to stay in New Zealand, while pursuing those who leave and default," Willis said.
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