This is the first Statistics New Zealand release of student loans and allowances data that includes information on whether a student completed their qualification. This allows for the inclusion of information such as graduates' income after leaving study, compared with those who did not complete their qualification. Note that students may complete particular courses successfully without completing or intending to complete a qualification (see 'Technical notes' for further information).
Student loan borrowers and student allowance recipients
The number of tertiary students who borrowed in a year through the student loan scheme increased 11.3 percent in 2009 (up 20,211) to reach 198,723 borrowers. This is the largest increase in the number of borrowers since the beginning of the scheme. The number of students who received a student allowance increased 25.4 percent in 2009 (up 16,368), to reach 80,703 allowance recipients, the largest increase recorded in the allowance data series, which started in 1999.
The increase in the number of students who borrowed or received an allowance in 2009 is due to a greater proportion of students accessing loans and allowances. This reflects the ongoing impact of the interest-free loans policy introduced in 2006, as well as an increase in the number of students enrolled in tertiary education.
Of students enrolled in 2009, 42.4 percent borrowed through the student loan scheme, up from 38.8 percent in 2008. Not all students are eligible to borrow. The Ministry of Education calculates that 71 percent of those eligible to borrow in 2009 did so, up from 69 percent in 2008.
The total number of enrolments rose by 1.8 percent (up 8,475) to reach 468,726 students in 2009. This was the first rise in enrolments following a three-year downturn, and this growth reflects the greater demand for tertiary education resulting from the recession.
Young students had the highest rates of borrowing of all age groups in 2009, with 62.7 percent of enrolled students aged less than 20 years taking out a student loan and 57.6 percent of enrolled students aged 20–24 years taking out a student loan. Two-thirds of all borrowers in 2009 were aged 24 years and under (of the 198,723 borrowers in 2009, 51,603 were aged less than 20 and 73,431 were aged 20–24 years).
Young students also made up the majority of student allowance recipients, with 63.6 percent of allowance recipients aged 24 years or less in 2009. The number of young students receiving an allowance in 2009 was up 30.3 percent (from 39,378 in 2008 to 51,294 in 2009), the largest increase of all age groups. Young students from these age groups received the lowest average amount of allowance of all age groups ($5,600 for students aged less than 20 years, and $6,100 for students aged 20–24 years).
The growth in the number of students receiving an allowance likely reflects adjustments made to the parental income threshold each year from 2005 to 2009, and lowering of the age limit from 25 to 24 years for parental income testing in 2009 (see the Ministry of Education’s Changes to the student support system for more information). Higher unemployment and under-employment in 2009 due to the recession may also have led to an increase in the number of students seeking financial support through student allowances.
The 11.3 percent increase in the number of borrowers in a year in 2009 was driven by a larger proportion of students who had borrowed returning to study in 2009 and, to a lesser extent, an increase in the number of new borrowers. There were 61,269 students who used the student loan scheme for the first time in 2009, an increase of 6,942 from 2008. This was the largest number of new borrowers using the student loan scheme in a given year since the scheme began. Notable increases in the number of new borrowers also occurred in 2000 and 2006 (as shown in the graph below), with the introduction of the interest-free loans while studying policy of 2000, and the 2006 interest-free policy for borrowers living in New Zealand.
Amount borrowed and received, and leaving debt
- the average amount borrowed in a year increased by 0.6 percent to $6,990, up from $6,950 in 2008
- the average allowance received in a year increased by 1.7 percent to $6,560, up from $6,450 in 2008
- the average leaving debt of borrowers who left study in 2008 (regardless of whether they completed their qualification) increased by 2.5 percent to reach $15,340, compared with $14,970 for those who left study in 2007.
These increases continue the upward trend in average borrowing in a year and leaving debt since 1992 when the student loan scheme began. The fee stabilisation policies from 2001 to 2003, and the fee and course costs maxima policy from 2004, have restricted fee increases by providers.
The average leaving debt for graduates (those who completed the qualification they were studying in 2008) was $18,100 in 2008, 0.6 percent more than 2007 graduates. Graduates from level 7 bachelor's qualifications in 2008 left study with the highest average leaving debt of $25,050. This was 3.6 percent more than 2007 bachelor's graduates.
Young graduates aged 20–24 years who had borrowed and left study in 2008 had the highest average leaving debt of all age groups at $23,940, as shown in the table below. They also had the highest proportion of graduates at 51.1 percent, and the highest proportion of graduates at bachelor's level or above (72.1 percent) of any age group in 2008.
|Leaving debt by completion status |
For students who left study in 2008
|Age group (years)
||Number of borrowers
||Percent of borrowers that completed
||Average leaving debt|
Did not complete
||Did not complete
Less than 20
Income one year post-study
The average income one year after leaving study for 2008 leavers was down 2.5 percent compared with 2007 leavers ($31,100 down to $30,320). The decrease in average income in the first year after leaving study reflects the impact of the recession on earnings in the labour market (note that a small part of this decrease maybe due to the time taken for all income to be filed with Inland Revenue).
Young 2008 leavers aged 24 years or less earned 7.1 percent less in the first year after leaving study than the previous leaving cohort in 2007, and were the age group most affected by the drop in income one year post-study. The average income for those aged less than 20 years dropped by 8.6 percent to $18,450, and by 6.0 percent to $29,200 for those aged 20–24 years.
The decrease in average income one year post-study for 2008 leavers was more pronounced for males than females, with income dropping 4.5 percent for males and 0.8 percent for females compared with 2007 leavers. Despite this, males still earned 7.0 percent more than females in their first year after leaving study ($31,530 and $29,470, respectively).
The drop in income also affected graduates in their first year after leaving study. Male graduates who left in 2008 earned 5.3 percent less ($33,690) compared with male graduates who left in 2007, and female graduates earned 1.9 percent less ($32,690). Male graduates earned 3.1 percent more than female graduates in their first year after leaving study in 2008.
Income five years post-study
Five years after leaving study male graduates earned significantly more than female graduates, with male graduates who left study in 2004 earning 21.3 percent more than female graduates five years after leaving study ($46,740 for males compared with $38,530 for females). The 21.3 percent difference is an increase from the 10.5 percent difference in first-year earnings for this cohort.
On average, income received after leaving study and wage growth experienced over the first five years is higher for graduates than for those who did not complete their qualification. Bachelor graduates had notable differences in earnings and wage growth compared with those who did not complete their bachelor qualification.
Level 7 bachelor 2004 graduates had an average income of $33,680 in 2005 one year after leaving study, which increased 43.7 percent to $48,410 by 2009. This compares with an average income of $30,280 one year post-study for those who did not complete their qualification, which increased by 35.6 percent to $41,060. Five years after leaving study graduates had an average income 17.9 percent higher than those who had studied but not completed their level 7 bachelor's qualification in 2004.
Proportion of debt repaid within five years
Borrowers who left study in 2004 had repaid an average 25.8 percent of their leaving debt within five years of leaving study (from $14,210 on leaving in 2004 down to $10,540 in 2009). There is typically a reported downturn in the percent repaid for the last leaving cohort (2004, as shown in the graph below) due to the timing of interest write-offs for borrowers in New Zealand by Inland Revenue. The proportional repayment of the 2004 leaving cohort will be revised next year once interest write-offs have been processed.
Repayments by completion status
Although graduates tend to have higher leaving debt compared with students who did not complete their qualifications, they also have higher repayment rates, paying off a greater proportion of their debt within five years of leaving study. The higher repayment rate reflects the higher income for graduates, as discussed above. By 2009, graduates who left study in 2004 with an average leaving debt of $16,360 had repaid 32.2 percent of their leaving debt within five years. Students who left study in 2004 without completing their qualification left study with an average debt of $12,470 but had paid off 19.2 percent within five years.
Full repayment of loan
The proportion of students who had fully repaid their loan on leaving study in 2008 was 11.4 percent, similar to recent leaving cohorts. A slight decrease in students who had fully repaid their loan on leaving study occurred when the interest-free policy for borrowers living in New Zealand began in 2006, although there was no noticeable change in behaviour in 2001 when the zero interest while studying policy was introduced.
The proportion of borrowers who had fully repaid their debt within five years of leaving study remained consistent with previous years. By 2009, just over one-third of 2004 leavers who had borrowed had fully repaid their leaving debt five years later (36.0 percent, or 16,938 of 47,031 borrowers).
Between 1992 and 1995 the higher percentage of borrowers who had fully repaid their student loan within five years of leaving study was partly due to the number of years available in which people could borrow, as well as the lower course fees in these years. The student loan scheme began in 1992; therefore, those leaving study in the earlier years had fewer years of borrowing to repay than those leaving in later years.
For definitions see the glossary in 'Technical notes' of this release.
For technical information contact:
Wellington 04 931 4600
Next release ...
Student Loans and Allowances: 2010 will be released in December 2011.