Mortgages

National exposes 'loophole' in interest-free student loans

National has exposed a loophole it says could see people exploiting Labour's new interest-free student loans.

Thursday, November 24th 2005

In Parliament, National's leader Don Brash highlighted a case in which a man used a clause in the 1992 student loan legislation which allows people to reclaim any voluntary payments within six months of making them.

Dr Brash says the man has withdrawn $15,000 of voluntary payments and placed it in the bank to earn interest.

Student loans are set to become interest-free next April under legislation currently before the House.

Finance Minister Michael Cullen says he is talking to Inland Revenue about closing the loophole.

According to Inland Revenue figures, $164 million was paid in voluntary loan payments in 2004.

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