From the 2008-09 tax year separate components of the student loan interest rate will no longer be set.

Sections 2, 50 and 87 of the Student Loan Scheme Act 1992, Regulations 5 and 6 of the Student Loan Scheme (Interest Rates Formulas) Regulations 2006

From the 2008-09 tax year separate components of the student loan interest rate will no longer be set.

Background

The student loan interest rate is set by Regulations made under the Student Loan Scheme Act 199 . The Student Loan Scheme (Interest Rates Formulas) Regulations 2006 currently set: an interest adjustment rate, a base interest rate, and the total interest rate. The interest adjustment rate is based on the rate of inflation. Various base interest write-offs ensured that, once study was completed, New Zealand-based borrowers' loans never increased by more than the rate of inflation. The introduction of interest-free loans has removed the need for these interest write-offs, and thus the need to set the components of the total interest rate.

Key features

From the 2008-09 tax year only a total student loan interest rate will be set.

Application date

The changes come into force on 1 April 2008.