New Zealand election puts graduate debt relief in focus as university funding takes a back seat

New Zealand's political parties have made student debt relief a prominent part of their higher education proposals ahead of the Nov 7 general election, offering voters different approaches to reducing loan repayments and outstanding balances. However, university funding and research investment have received considerably less attention in the parties' election platforms.

The proposals range from reducing compulsory student loan repayments and writing off part of graduates' debt to cutting interest rates for borrowers living overseas. Other measures include making student service fees voluntary and increasing penalties for graduates who move abroad without meeting their repayment obligations.

The debate comes as universities continue to face financial pressures, with questions around sustainable funding and research investment remaining largely unanswered in the major parties' election commitments.

The governing National Party has not announced new policies on university funding or research. Its higher education platform is centred on a graduate debt-relief package, while the opposition Labour Party has offered a broad commitment to more predictable funding without providing detailed proposals for its implementation.

National proposes lower student loan repayments

The National Party, led by Prime Minister Christopher Luxon, has proposed reducing the compulsory student loan repayment rate from 12 cents to 10 cents for every dollar earned above the repayment threshold. The change would take effect from April 1, 2027, if the party returns to government.

Under the existing system, borrowers begin making compulsory repayments when their income exceeds NZ$24,128 a year. National says reducing the repayment rate would allow graduates to retain a larger share of their earnings during the early stages of their careers.

The party has estimated that an accountant earning NZ$75,000 annually would keep an additional NZ$39 every fortnight, or approximately NZ$1,000 a year. A junior doctor earning NZ$100,000 could retain an additional NZ$58 every fortnight, amounting to around NZ$1,500 annually.

National has also proposed tougher measures against borrowers who move overseas without meeting their student loan obligations. These include increasing the interest charged on overseas-based borrowers' balances by one percentage point, restricting access to KiwiSaver retirement savings for some borrowers and strengthening enforcement powers in cases of sustained repayment default.

The party has argued that overseas-based borrowers account for 93 per cent of overdue student loan debt. However, its proposals have attracted criticism over whether the repayment reduction would make a substantial difference to graduates' finances.

Tertiary education policy expert Roger Smyth said that the benefit of the lower repayment rate could be offset by National's separate proposal to increase compulsory employee contributions to KiwiSaver from 3.5 per cent to 6 per cent.

Labour promises a 10 per cent student debt reduction

The Labour Party has proposed reducing eligible student loan balances by 10 per cent, with the first round of reductions scheduled for April 2027 if it forms the next government.

The proposal would apply to graduates who are based in New Zealand for tax purposes, have completed their studies, are up to date with repayments and did not benefit from the previous Fees Free scheme.

Current and future students would also become eligible for the reduction after completing their qualifications and spending three years in New Zealand. The party has said borrowers who benefited from Fees Free or failed to meet their repayment obligations would not qualify.

Labour estimates that the measure would cost nearly NZ$40 million annually once fully implemented. However, Smyth questioned how much graduates would actually save, noting that eligible borrowers would have already made at least three years of repayments before receiving the reduction.

Beyond student debt, Labour has promised to refocus the country's Tertiary Education Strategy towards stable and sustainable funding arrangements. It has proposed a funding approach that would provide universities and other tertiary institutions with three to five years of certainty.

However, the party has not provided extensive details on how it would deliver this commitment or how much additional funding would be made available. Its 101-page election manifesto contains limited references to research, science and universities.

Other parties propose interest relief and tuition changes

The Opportunity Party has proposed forgiving up to three years of student loan interest for graduates who return to New Zealand after working overseas. The measure is intended to encourage young New Zealanders to gain international experience before bringing their skills and knowledge back to the country.

The Green Party has put forward broader changes to student financing, including reducing interest rates for overseas borrowers, gradually eliminating tuition fees, writing off student debt and introducing a universal student income.

The party has proposed funding these measures through a 2.5 per cent wealth tax on individuals with net assets exceeding NZ$10 million, excluding family homes.

Unlike the major parties, the Greens have also outlined a more detailed research, science and technology policy. This includes a target to increase New Zealand's research and development expenditure to 3 per cent of gross domestic product. However, Smyth said that even if the party entered government, it was unlikely to take responsibility for the research portfolio.

The Act Party, meanwhile, has proposed making student service fees voluntary. According to the party, this could save students up to NZ$1,253 annually. The proposal has been discussed alongside wider concerns about the cost of living and the financial burden of higher education.

University funding and research remain unresolved

While student debt has become a prominent election issue, the parties have offered fewer concrete proposals addressing the financial sustainability of universities and the country's research system.

National has not announced new university funding or research policies, while Labour's commitment to longer-term funding certainty lacks details on the proposed financial arrangements. The Greens have outlined a research investment target, but its role in a potential government remains uncertain.

The limited attention to institutional funding has raised questions about how universities will secure predictable financial support for teaching, research and long-term planning, regardless of which parties form the next government.

The debate has also highlighted the gap between measures aimed at individual borrowers and the broader funding requirements of the tertiary education sector.

With voters due to go to the polls on Nov 7, the competing proposals offer different approaches to student debt, but leave several questions about the future of university funding and research investment open.