Labour will wipe 10% off the student loans of New Zealand-based graduates next April if it wins the election, and clear balances of $2000 or less entirely.
Current and future students would get the same cut once they had stayed in New Zealand for three years after finishing their studies.
Party leader Chris Hipkins announced the policy at the party's campaign launch today, 41 days out from the election.
"If you have a student loan and stay in New Zealand, under Labour you will owe less."
The first write-off, on April 1, 2027, would go to those who have finished study, are based domestically, are up to date with their repayments and did not benefit from Fees Free.
Labour's costings put the policy at $583.4 million over five years, with $439.5 million of that falling in the 2026/27 year.
The write-offs would remove $813.5 million from borrowers' balances. Labour values that debt at $460.2 million on the books, because some loans are never fully repaid.
For students still studying, the first write-offs would land in 2031, three years after the class of 2027 finishes. From then on, a new group of graduates would qualify each year.
Labour estimates that would cost the government nearly $40 million a year.
'We want you here'
Hipkins pitched the policy as a way to stop young people moving offshore.
He told the launch: "If you're studying now, or you start in the future, stay in New Zealand for three years after you finish and we'll wipe 10% off your loan.
"Because if you study here, work here and contribute here, you should be able to get ahead here. No one should have to leave New Zealand to build their future.
"We want you here."
If re-elected, the party says it will also get tough on overseas-based Kiwis with student debt. (Source: 1News)
Labour tertiary spokesperson Shanan Halbert said many made little dent in their loans.
"People have done the hard work to get a qualification. They shouldn't have to spend years watching their student loan barely move," he said.
"Labour will cut that debt and give people a bit more freedom to get on with their lives."
Labour's policy document gives the example of a doctor who starts work on about $105,000 with a $120,000 loan. After three years working in New Zealand, they could expect about $9000 to be written off. Meanwhile, a teacher with a $40,000 loan on a starting salary of $66,000 would get about $2400 off.
Hipkins said the policy was fully funded, but that Labour would publish its fiscal numbers in full once the government opened the books next week.
National unveiled its own student loan policy last month.
Its plan would cut the compulsory repayment rate from 12 cents to 10 cents in every dollar earned above $24,128 from April 1, 2027.
National forecast that change to cost $438 million over five years.
It also pledged tougher penalties for overseas-based borrowers, including an extra 1% interest on their balances.
Under Labour's policy, borrowers can travel overseas and still qualify, as long as they stay classified as New Zealand-based under existing student loan rules for the full three years.
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