If Labour wins the upcoming election, the party will wipe 10 percent off the student loans of New Zealand-based graduates starting April 1, 2027, and clear balances of $2,000 or less entirely. Party leader Chris Hipkins announced the policy during his party’s campaign launch in Manukau today, pitching the debt relief as a direct measure to keep young talent from moving offshore.
Policy Details and Timelines for Domestic Borrowers
Under the proposed changes, current and future students would receive the same 10 percent cut once they complete a three-year period staying in New Zealand after finishing their studies. The initial write-off on April 1, 2027, targets individuals who have already finished their studies, are based domestically, remain up to date with their repayments, and did not benefit from Fees Free. Borrowers can travel overseas and still qualify, provided they stay classified as New Zealand-based under existing student loan rules for the full three-year duration. For students still studying when the policy is enacted, the first write-offs would land in 2031—three years after the class of 2027 finishes—with a new group qualifying each year thereafter.
Financial Costings and Projected Debt Reductions
Labour’s official costings price the overall policy at $583.4 million across five years, with $439.5 million of that expenditure falling specifically within the 2026/27 financial year. Future governments would face an estimated cost of nearly $40 million a year once student cohorts begin qualifying annually from 2031 onward. Because some loans are never fully repaid, Labour values the debt on the books at $460.2 million, even though the write-offs eliminate a total of $813.5 million from borrower balances. Labour tertiary spokesperson Shanan Halbert noted that many people struggle to make a dent in what they owe. Illustrative examples in Labour’s policy document show that a doctor starting work on about $105,000 with a $120,000 loan could expect roughly $9,000 written off after three years, while a teacher with a $40,000 loan on a $66,000 starting salary would see about $2,400 removed.
Political Clash and Rival Student Loan Proposals
National campaign chairperson Simeon Brown labeled the policy “yet another expensive handout” that shifts debt directly onto taxpayers. Last month, National introduced a rival student loan plan that would, starting April 1, 2027, lower the mandatory repayment rate from 12 cents to 10 cents for every dollar earned over $24,128, with an expected cost of $438 million over five years. Meanwhile, ACT leader David Seymour characterized Labour’s plan as a “bribe” that forces all taxpayers to cover the cost of tertiary education for specific borrowers. Hipkins countered criticism by maintaining that the policy is fully funded, adding that Labour will publish its fiscal numbers in full once the government officially opens the books next week.
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