By Kate Chapman of NZPA
Wellington, June 24 NZPA - Students who work during university holidays may be forced to start paying off their student loans if proposed changes to the repayment threshold are made.
Currently people with student loans have to make repayments if they earn over $19,084 a year.
The changes will see the threshold changed to be weekly, fortnightly or monthly, in line with an individual's pay period.
The total yearly threshold will remain unchanged, however students who work full time during the holidays may now find themselves over the $367 weekly threshold and having to make payments while they save for the year ahead.
The Government proposed the change to be made alongside the launch of an online system to allow people to manage their student loans and make repayments with ease.
The changes would cost $30 million over the next three years.
Revenue Minister Peter Dunne said it was the first step in a movement to have all Inland Revenue Department operations online.
Student loan management had been "cumbersome" and difficult to maintain, Mr Dunne said.
People will have the "same sort of access to their student loan balances and the same sort of ability to get the information they need as they do when they engage in electronic banking" under the new system.
"We've gone through quite a number of hoops to make sure it's a secure system."
The "most contentious" issue would be the changes to the threshold timing, Mr Dunne said.
"There will be issues around the fact that it's being done more regularly now and we're certainly keen to gauge opinion on that."
More regular repayments will make it "much easier (for borrowers) to keep track of their debt" in real time.
Under the current system there is a "square-up" at the end of the year between what was due and what was paid and late fees might have been charged.
"(Under the new system) borrowers won't have to pay lump sums or late payment penalties for under payments ... further deductions can be adjusted to correct the error," Mr Dunne said.
Consultation on the new online system and changes to the threshold will be carried out online until July 17.
Mr Dunne expected legislation initiating the changes would be introduced by the end of the year and the system would be in use by 2011.