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May 27, 2013 | by  | in News |
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No Bonus About It

Student-Loan-holders have capitalised on the last opportunity to claim the voluntary ten-percent repayment bonus, with millions repaid in time to beat the cutoff.

Recently released Treasury figures show Student-Loan repayments for the nine months ending in March were almost $109 million higher than expected. This figure represents 0.8 per cent of the $13.5 billion owed in Student Loans.

The voluntary repayment bonus was cancelled in the 2012 Budget, a change which came into effect on 1 April 2013. Previously, Student-Loan-holders who paid off $500 or more on top of their obligatory repayments qualified for an additional ten-per-cent bonus credited to their loan account.

Overall, borrowers repaid $812 million in the year to March 2013, $263.4 million more than in the same period last year.

Minister of Revenue Peter Dunne says the rise in repayments can be attributed to the end of the repayment bonus; a rise he does not foresee occurring again in future.

“Some of that is undoubtedly a one-off as a result of people paying more before the end of the repayment-bonus programme at the end of March,” he said.

Student-Loan-holders Salient spoke to had known about the repayment-bonus scheme, but weren’t able to use it, because they didn’t have the extra cash to spare.

“Although [the bonus] was much higher than interest I would get in a bank account, I didn’t have that much saved. It would have saved me about $500.

“I decided I’d rather have that money to spend now than see my Student Loan get marginally smaller,” one said.

Another mentioned that “it seemed like a good incentive in principle”, but held that it just ended up providing wealthy people an opportunity to save money off the scheme.

“The reality for most graduates is that lump-sum repayments are not really possible unless you’ve saved a lot throughout your studies or have generous parents.”

Other changes to the Student Loan Scheme which have come into effect recently include the increase in the repayment rate from ten to 12 cents in every dollar earned over the threshold. The Government is expected to announce further initiatives aimed at recovering loans from overseas-based borrowers soon.

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