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Student Loans and Allowances: 2005
Embargoed until 10:45am  –  03 April 2007
Commentary

Student loans and allowances

Statistics New Zealand’s Integrated Dataset on Student Loans and Allowances links educational information from the Ministry of Education with borrowing and allowance information from the Ministry of Social Development (StudyLink) and income and repayments information from Inland Revenue. It allows the educational characteristics of student loan borrowers and student allowance recipients to be linked with the details of their loans, allowances and income.

This release supplements information in the Annual Report on the Student Loan Scheme Incorporating the Financial Statements to 30 June, published by Ministry of Education, StudyLink and Inland Revenue released in October 2006.

Definitions

Amount borrowed / amount received: the amount borrowed or received by a student in a particular calendar year (this is not the total amount borrowed by the student over all years of study).
Leaving debt: the total debt still owing on leaving study, including any repayments the student may have made during study. This data will always be a year behind the release date. For example, in the 2005 dataset on student loans and allowances leaving debt data is only available for those who left study up to 2004 and did not return the following year.
Debt five years post-study: the total debt still owing five years after leaving study, including any repayments made up to this time.
Income one year post-study: the taxable income earned in the tax year after leaving study.
Income five years post-study: the taxable income earned in the tax year five years after leaving study.

Note: Debt and income information, when provided, does not distinguish those who completed their qualification from those who did not.
Field of study, level and provider type are those during the student's last year of study.
Information on borrowers who were overseas relates only to individuals who notified Inland Revenue that they were leaving or had left New Zealand.

Time periods covered by this release

The aim of this release is to provide statistics from the earliest point at which information is available. Due to the nature and sources of data available, this aim results in some statistics being reported on from different years:

1992 – Leaving debt, debt five years post-study and full repayment information is available for those who left study from 1992 onwards.
1995 – Income information is only available for those who left study from 1995 onwards.
1997 – Information on ethnicity, field of study, level of study and provider type is only available from 1997 onwards.
1998 – Information on the residency of former borrowers is only available from 1998 onwards.
2000 – The amount borrowed or received in a particular calendar year is only available from 2000 onwards

Due to the inclusion of income data in this release, and the time required to include the data for salary and wage earners and for those who are self-employed, the most recent data available is for 2005.

Male and female borrowing debt, repayments and income

Overall trend of borrowing

Borrowing in 2000 followed a broadly similar pattern to borrowing in 2005. In 2000, 33 percent of students borrowed between $2,500 and $4,999.99. In 2005, 28 percent of students borrowed between these amounts. The largest numerical increases in borrowers between 2000 and 2005 were those who borrowed between $0 and $2,499.99, and those who borrowed between $10,000 and $12,499.99.

There were 21 percent more borrowers in 2005 (154,374 borrowers) compared with 2000 (128,085 borrowers).

The average amount borrowed in a year increased by $300 (5 percent) from $6,110 in 2000 to $6,410 in 2005.

Graph, Amount Borrowed - Percentage of Borrowers.

Note: Due to the small number of students who borrow more than $20,000 in a particular year, this graph has been truncated.

More female borrowers

There were more female borrowers than male borrowers in 2000 and in 2005, with females outnumbering males in all levels of borrowing under $15,000 (56 percent of borrowers at this level were female in 2000 and 61 percent in 2005).

This was most pronounced among those who borrowed more than $0 but less than $2,500 (65 percent of borrowers at this level were female in 2005 with 66 percent in 2000), and between $2,500 and $4,999.99 (62 percent of borrowers at this level were female in 2005 with 57 percent in 2000).

Only in the $15,000 and over borrowing level were females outnumbered by males (53 percent of these borrowers were male in 2005 with 56 percent in 2000).

Males borrow more

In 2005 males borrowed 11 percent more, on average, than females, with a larger percentage of females borrowing under $5,000, and a larger percentage of males borrowing over $10,000.

Between 2000 and 2005, the average amount borrowed in one year by males increased by $410 (6 percent) to $6,830. Females borrowed $270 (5 percent) more than in 2000, to average $6,130 in 2005.

Overall trend of leaving debt and debt five years post-study

The average leaving debt accumulated by students who borrowed under the Student Loan Scheme while studying increased from $11,220 for those who left study in 1997 to reach $14,780 for those who left study in 2004 (up 32 percent).

The proportion of borrowers who left study owing less than $10,000 fell from 59 percent for those who left in1997 to 50 percent for those who left in 2004. The proportion of leavers with debts in the $20,000 to $69,999.99 range increased from 17 percent to 25 percent during this time. For the $20,000 to $29,999.99 range the proportion increased from 10 percent to 12 percent.

The proportion of debt repaid within five years of leaving study has decreased over time. Borrowers who left study in 1995 had paid off, on average, 32 percent of their loan five years later. Students who left in 2000 had paid off, on average, 21 percent of their loan five years after leaving study.

Higher leaving debt for males

The average leaving debt for males in 2004 ($16,290) was $2,590 higher than for females ($13,700). This compares with an average difference in 1997 of only $60 between males ($11,250) and females ($11,190).

The difference between the average leaving debt for males and for females who left study in 2004 reflects the higher proportion of females with debt under $10,000, while a higher proportion of males left with debt in the higher ranges of $20,000 to $79,999.99.

While debt for males is higher, this difference is more significant for those overseas.

See Borrowers Overseas for further information (www.stats.govt.nz/studentloans).

See Student Financial Support for further information (www.stats.govt.nz/studentloans).

Proportion of borrowers who had repaid their loan in full on leaving study and five years post-study

Graph,  Full Repayment of Loan.

Between 1992 and 2004 the number of borrowers with a debt outstanding on leaving study increased from 11,103 to reach 64,413. The number of borrowers who had repaid their loan in full on leaving study also increased from 543 to reach 4,569.

Plateau in students who fully repaid their loans on leaving since 1997

The proportion of all borrowers who had fully repaid their debt on leaving was around 3 percent between 1992 and 1996. This increased in 1997 and has remained relatively steady at around 6 percent until 2004 (the latest year for which full repayment at the point of leaving study information is available). There is no noticeable change in behaviour from 2001 when the zero interest while studying policy was introduced.

The proportion of males and females who had repaid their loan on leaving study was very similar, with females fractionally higher for some years (up to 1 percentage point).

Decline in proportion fully repaying loan five years post-study

The proportion of those who had fully repaid their debt five years post-study decreased from 50 percent for those who left study in 1992 (5,829 out of 11,643 borrowers) to 34 percent for those who left in 2000 (14,082 out of 41,421 borrowers). In comparison just 6 percent of borrowers who left study in 2000 had repaid their loan on leaving study (2,328 borrowers).

The decline in full repayments seen from 1992 to 1994 is partly due to the number of years available in which people could borrow. The Student Loan Scheme began in 1992, therefore, those leaving study in 1992 to 1994 had fewer years of borrowing to repay than those leaving in later years. By 1994, this effect had decreased markedly as three years of borrowing would have been available. The proportion of those who had fully repaid their loan five years post-study declined from 39 percent for those who left study in 1994 to 34 percent for those who left study in 2000. In part, this reflects the increase in leaving debt over that time, in response to growth in fees from 1992 to 2000.

Although females had a lower average income than males, five years post-study, the proportion who have paid off their loan during this time is no less than for males, and for some years is higher (up to 4 percentage points). For those who left in 1992, 52 percent of females had fully repaid their loan in 1997, compared with 48 percent of males. However, for later years (for those leaving in 1998, 1999 and 2000) the proportion of males and females who repaid their loan five years post-study was the same (around 34 percent).

See Full Repayments for further information (www.stats.govt.nz/studentloans).

Overall trend of income

The average income one-year post-study has increased by 19 percent from $21,590 for those leaving study in 1995 to $25,740 for those leaving in 2004. There was a small decline for those leaving in 1998.

Male and female income disparity

Graph, Average Income 1 Year and 5 Years Post-study.

While the average income one year post-study is only slightly higher for males than for females, four years later this gap has widened, so that male income five years post-study is significantly higher than females for the same period.

The average one year post-study income for males who left study in 1995 was 6 percent higher than for females in the same leaving cohort. Four years later, their average income was 17 percent higher than for females in the same leaving cohort.

In comparison, the average one-year post-study income for males who left study in 2000 was also 6 percent higher than for females in the same leaving cohort. Four years later, the male average income was 20 percent higher than for females in the same leaving cohort. This is three percentage points more than the gap for those who left in 1995.

Graph, Average Income for Students who Left Study in 2000.

Health

Those who left health courses in 2000 had the highest average income one-year post-study ($31,300 in 2001) and five years post-study ($39,530 in 2005), a 26 percent increase. Health had the highest average one- and five-year post-study incomes for males and females for those who left in 2000. Health also had the biggest gap between male and female average five-year post-study income at 71 percent, ($60,660 for males and $35,530 for females).

Food, hospitality and personal services

Students who last studied food, hospitality and personal services courses in 2000 had the lowest income of all fields of study one year and five years post-study, earning, on average, $16,420 in 2001 and $23,650 in 2005, an increase of 44 percent. The income for males in food, hospitality and personal services who left study in 2000 was, on average, 54 percent higher in 2005 than in 2001, up from $17,850 to $27,530. Females who left study in 2000 had an average income of $15,750 in 2001, and $21,890 in 2005, a 39 percent increase.

Management and commerce

For those who left management and commerce courses in 2000, the average income for females increased by 38 percent, from $22,540 in 2001 to $31,130 in 2005. For males the average income increased by 61 percent, from $26,650 in 2001 to $43,000 in 2005.

Architecture and building

The income of males in architecture and building who left study in 2000 was, on average, 61 percent more in 2005 than in 2001, up from $21,440 to $34,490. Females who left study in 2000 had an average income of $20,530 in 2001, and $31,320 in 2005, a 53 percent increase.

Engineering and related technologies

There was only a 1 percent difference in the average income one-year post-study for males and females from engineering and related technology courses in 2001 (both about $24,000). This was the smallest percentage difference between the sexes. However, four years later in 2005, the average income for the same leaving cohort was $37,140 for males and $31,650 for females (17 percent higher for males).

Creative arts, and society and culture courses

Females who left creative arts and society and culture courses in 2000 had a higher one year post-study income than males ($19,280 for females and $18,540 for males in creative arts, and $21,940 for females and $21,630 for males in society and culture courses). Four years later in 2005 males' income was 7 and 9 percent higher than females' for these courses, respectively.

Borrowing, debt and income by age group

Graph, Average Amount Borrowed.

Most borrowers under 25 years of age

In both 2000 and 2005 the majority of borrowers were under 25 years of age. The 20–24 year age group has held its place as the most common age group to borrow, with 36 percent of students in this category. The proportion of borrowers aged under 40 years has decreased overall from 90 percent in 2000 to 87 percent in 2005 (while the proportion of those aged 40 years and over has increased, from 10 percent to 13 percent over the same period).

Amount borrowed increases most for those aged 60 years and over

The pattern of borrowing remained fairly stable for most age groups between 2000 and 2005. The biggest increase was for those aged 60 years and over, with borrowing up 34 percent from $6,010 to $8,040, making them the largest borrowers on average. There is some volatility in the average amount borrowed over time, due to the small number of borrowers in this age group.

Highest leaving debt for 25–29 year olds

The highest average leaving debt for those who left study in 2004 was for those aged 25–29 years ($19,020), followed by 20–24 year olds ($18,730) and those 60 years and over ($16,340).

Graph, Leaving Debt.

Leaving debt for those aged 60 years and over increases 141 percent

The average leaving debt for those aged 60 years and over increased significantly from 1997 ($6,790) to 2004 ($16,340). This is reflected by the decline in the proportion of borrowers aged 60 years and over in the category greater than $0 and less than $10,000 (70 percent in 1997, down to 40 percent in 2004), and an increase in those borrowing $20,000 to $39,999.99 (5 percent in 1997, up to 32 percent in 2004).

While the number of those aged 60 years and over who have debt from $30,000 to $39,999.99 is very small (about 100) in the 2004 leaving cohort, the proportion of those in this age group borrowing this amount is high compared with other age groups.

See Student Financial Support for further information (www.stats.govt.nz/studentloans).

Borrowing, debt and income by ethnicity

Graph, Average Debt and Income.

The 2000 leaving cohort

Ethnic group Average debt ($) Average income ($)

Leaving debt in 2000

Debt in 2005

Percentage decrease (%)

Income in 2001

Income in 2005

Percentage increase (%)

European

13,640

10,280

-25

24,340

34,870

43

Māori

11,450

10,240

-11

20,590

29,000

41

Pacific peoples 13,420

12,860

-4

20,740

30,550 47
Asian 12,190

10,380

-15

21,440

34,790

62

Total

12,960

10,300 -21

23,270

33,520 44

Overall trends of borrowing, debt and income for ethnic groups

Among borrowers who left study in 2000, Europeans had the highest leaving debt and average income, both one and five years post-study. They also made the most progress in repaying debt over this post-study period.

Pacific peoples had high leaving debt, low average income, and made the least progress of any ethnic group in repaying debt.

Leaving debt and average income were lowest for Māori.

European and Asian borrowing increases

The average amount borrowed in 2000 and 2005 increased for both European and Asian borrowers – 7 percent for European borrowers, from $6,180 in 2000 to $6,590 in 2005; and 11 percent for Asian borrowers, from $5,920 in 2000 to $6,560 in 2005. The large increase in the average amount borrowed by those in the Asian ethnic group reflects an increase in the number of Asian borrowers, up from 14,643 in 2000 to 23,343 in 2005 (an increase of 59 percent).

Māori and Pacific peoples borrowing decreases

The average amount borrowed by Māori and Pacific peoples decreased between 2000 and 2005 (down 1 percent for Māori, from $5,900 to $5,850, and down 2 percent for Pacific peoples, from $6,430 to $6,290). The decreases for borrowers in these ethnic groups are likely to be due to an increase in enrolments in low-fee and short-duration courses at institutions such as wānanga.

Graph, Average Debt 5 Years Post-study.

Pacific peoples debt increases

Pacific peoples' average leaving debt increased by 41 percent from 1997 ($11,020) to 2004 ($15,590). This was only slightly lower than the European group's average leaving debt of $15,600 in 2004, which generally was the highest average leaving debt over time.

Pacific peoples consistently had the highest average debt five years post-study, reaching $12,860 in 2005 for those who left study in 2000. This was noticeably higher than both the overall average for every year, and averages for European, Māori, and Asian borrowers (which were all under $10,400 in 2005). In 2005, the average five year post-study debt for Pacific peoples was nearly 24 percent higher than it was for Asian borrowers, the second highest group in 2005 ($10,380).

Asian borrowers have steepest rise in leaving debt

Asian borrowers had the largest rise in average leaving debt, at 73 percent, up from $8,630 in 1997 to $14,890 in 2004. The number of Asian borrowers with a leaving debt also increased substantially, from 2,091 in 1997 to 7,710 in 2004. The Asian ethnic group, however, had the lowest average leaving debt between 1997 and 1999.

Asian borrowers also had a 73 percent increase in debt five years post-study for those who left study between 1997 and 2000. For those who left study in 1997, the average debt for Asian borrowers was $6,010 (in 2002) – the lowest for all ethnic groups. However, by 2005 the average debt for this group was $10,380, which is higher than for all other ethnic groups except Pacific peoples. The increase in debt for Asian borrowers is partly attributable to a change in level of courses and types of courses studied.

Repayment low for Pacific peoples, high for European and Asian borrowers

Nine percent of Asian and 8 percent of European borrowers had repaid their loan on leaving study in 2004.

The proportion of borrowers who left study in 1997 and had repaid their loan five years post-study in 2002, was highest for Asian borrowers (46 percent). However, the proportion of Asian borrowers who had repaid their loan five years post-study declined markedly over four years, down to 34 percent in 2005 for those who left study in 2000.

While Pacific peoples and European ethnic groups who left study in 2000 had similar average debt on leaving study ($13,640 for European and $13,420 for Pacific peoples), a large repayment discrepancy had appeared within five years. European borrowers paid off, on average, 25 percent of their loan five years after leaving study (the highest percentage for all ethnicities), while Pacific peoples had paid off only 4 percent of their loan (the lowest percentage for all ethnicities).

Māori lowest leaving debt and income from 2000

Māori borrowers had the lowest average leaving debt in 2000, at $11,450. By 2005 they had repaid 11 percent of their loan, on average, and continued to have the lowest debt five years post-study, at $10,240.

Māori borrowers who left study in 2000 also had the lowest average income one year post-study ($20,590) and five years post-study ($29,000). However, this was still a 41 percent increase in average income, and is similar to the increases for European and Pacific peoples (a 43 percent increase from $24,340 one year post-study to $34,870 five years post-study for Europeans; a 47 percent increase from $20,740 one year post-study and $30,550 five years post-study for Pacific peoples).

Asian borrowers have highest average income increase

Asian borrowers who left study in 2000 had the largest percentage increase in average income at 62 percent, up from $21,440 in 2001 (one year after study) to $34,790 in 2005 (five years after study).

Pacific peoples have highest rate of increase in income five years post-study

The largest increase in average income five years post-study was for Pacific peoples. They had a 9 percent increase, up from $28,000 in 2002 (for those who left study in 1997) to $30,550 in 2005 (for those who left study in 2000). The largest increase occurred between 1997 and 1998.

Loans and allowances

Financial support options available to students

Graph, Student with loan and/or allowance.

The above diagram (not to scale) shows the financial support options available to students. Students can have a loan and/or an allowance.

Overall trend of loans and allowances

The number of students receiving allowances has decreased, while the number of students with a loan (with no allowances) has increased. Students with a loan who have an allowance borrow less. Students with a loan and an allowance have a higher allowance than those without a loan.

Graph, Student with Loans and/or Allowances.

Increasing number of students receive loan and/or allowance

The overall growth in the number of loan and/or allowance students was 16 percent, rising from 140,979 in 2000 to reach 162,966 in 2005. Most of the increase came between 2000 and 2001 (13 percent) reflecting the increase in loan-only students in that time (21 percent).

Number of allowance-only students falls 44 percent

The number of students receiving only an allowance nearly halved between 2000 and 2005, from 12,873 in 2000 to 7,251 in 2005 (a decrease of 44 percent). The number of students receiving a loan and an allowance also decreased 13 percent between 2000 and 2005, down from 52,275 in 2000 to 45,420 in 2005. While the number of students receiving allowances had decreased, students who had both a loan and an allowance borrowed less, on average, than students who had a loan-only (17 percent less in 2000 and 13 percent less in 2005).

The 8 percent increase in loan and allowance students between 2000 and 2001 (up 3,984) reflects in part the drop in allowance-only students in the same years (down 2,592), as students who qualified for an allowance also borrowed.

Number of loan-only students increases

The number of borrowers without an allowance increased 44 percent between 2000 and 2005, from 75,810 to 108,954, with the biggest increase occurring in 2001 (21 percent).

About 7 in every 10 borrowers did not have an allowance in 2005. The proportion of loan-only students rose from 59 percent in 2000 to 71 percent in 2005.

Average student allowance received in 2005 remains below 2000 level

The average amount of student allowance received fell 11 percent between 2000 and 2001, and has not yet returned to the 2000 level ($5,610 in 2005, $5,870 in 2000). This is despite allowance rates rising annually.

This trend was reflected in the average total allowance and accommodation supplement received, which fell 10 percent from 2000 ($6,490) to 2001($5,870). It then climbed steadily from 2001 ($5,870) to 2005 ($6,390) but has not yet returned to the 2000 level, although it has been helped slightly by the increase in average accommodation benefit received.

Accommodation benefit increases

The average accommodation benefit received increased steadily between 2000 and 2005, and was up 29 percent over five years, from $780 to $1,010. Fifteen percent of this increase occurred between 2004 and 2005, up from $890 to $1,010.

Borrowers with allowances borrow less

Loan and allowance students borrowed less, on average, than loan-only students (17 percent less in 2000 and 13 percent less in 2005).

However, receiving an allowance has not led to a decline in the average amount borrowed. The annual average amount borrowed by loan and allowance students increased by 6 percent from 2000 ($5,460) to 2005 ($5,810). The annual average amount borrowed by loan-only students increased by only 2 percent, up from $6,550 in 2000 to $6,660 in 2005.

Allowances 10 percent higher among borrowers

The average allowance received by loan and allowance students tended to be about 10 percent higher than for allowance-only students. This occurred in all years except in 2000, when the allowance received by loan and allowance students was 15 percent higher.

This difference between allowance students with and without loans could reflect a greater financial need for students who need to borrow. This would flow through to them being eligible for more allowance.

See Student Financial Support for more information (www.stats.govt.nz/studentloans).

Comparison of borrowers living overseas and in New Zealand

Borrowers living overseas and borrowers in New Zealand from 1998 to 2005

In 2005, 95 percent of those who had borrowed between 1997 and 2004 were recorded as living in New Zealand (not self-declared as living overseas). A total of 360,912 borrowers were in New Zealand and 20,952 borrowers were overseas. There was a similar proportion in 1998, when 96 percent of borrowers were living in New Zealand.

Average debt higher for borrowers living overseas

The average debt for those living overseas was 57 percent higher than for those living in New Zealand in 1998. This rose to 70 percent higher in 2005.

The average debt of borrowers living overseas increased faster than the average debt of those living in New Zealand between 1998 and 2005. The average debt of borrowers living overseas increased by 33 percent, rising from $18,830 in 1998 to reach $25,100 in 2005. This compares with a rise of 23 percent for borrowers living in New Zealand, from $11,980 in 1998 to reach $14,730 in 2005.

Contributing factors to the increase in average debt for borrowers who have gone overseas may be increases in the amount borrowed and the application of interest and penalties for those borrowers who did not meet their repayment obligations.

Graph, Average Debt of Borrowers.

Male borrower debt higher, especially for those overseas

Males had an increasingly higher average debt than female between 1998 and 2005, both for those living in New Zealand and for those living overseas.

In 2005 the average debt of male borrowers who were living overseas ($27,250) was 17 percent higher than their female counterparts ($23,220), up from 7 percent higher in 1998 ($19,490 for males, $18,150 for females).

This compares with the average debt for males ($15,550) living in New Zealand being 11 percent higher than for females ($14,040) in 2005, up from 4 percent higher in 1998 ($12,240 for males, $11,730 for females).

Highest overseas debt for borrowers who studied health

The highest overseas average debt for all years was for those who had studied health, increasing 7 percent from $27,780 in 1998 to reach $29,740 in 2005. Although borrowers who studied health had the highest average debt overseas, they were just below the two highest average debt categories in New Zealand in 2005 (the natural and physical sciences, and education).

The second-highest overseas average debt in 2005 was for those who had studied science. Their average debt had increased 39 percent, up from $20,200 in 1998 to reach $28,130 in 2005. This compared with a 30 percent increase for those in New Zealand from $15,500 in 1998 to $20,160 in 2005.

Food, hospitality and personal services have lowest debt in New Zealand and overseas

The lowest average debt for borrowers both in New Zealand and overseas was for those who had studied food, hospitality and personal services courses. Their debt, increased by similar proportions (29 percent in New Zealand, and 28 percent for those overseas) between 1999 and 2005. For those living in New Zealand, debt rose from $8,420 (1999) to $10,890 (2005); for those overseas it rose from $12,080 (1999) to $15,440 (2005).

The second-lowest overseas average debt was for those who had studied information technology, however, this increased substantially up from $12,300 in 1999 to reach $19,760 in 2005 (an increase of 61 percent).

See Borrowers Overseas for further information (www.stats.govt.nz/studentloans).

For definitions see the glossary in the technical notes section of the Hot Off The Press.

For technical information contact:
Guido Stark
Wellington 04 931 4600
Email: info@stats.govt.nz

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