Labour would wipe 10 percent off the student loans of graduates who live in New Zealand, and clear any balance of $2000 or less completely, under a policy Chris Hipkins announced at the party’s campaign launch in Manukau on Sunday.
The first write-off would land on 1 April 2027. It would go to borrowers who have finished studying, are New Zealand-based for tax purposes, are up to date with their repayments and did not benefit from the fees-free scheme, 1News reported. People who are still studying, or who start in future, would qualify once they had stayed in New Zealand for three years after finishing their course.
Hipkins made the announcement at the Due Drop Events Centre in South Auckland, six weeks out from the 7 November election, and pitched it as a reason for young people to build their lives here rather than in Australia.
“Student debt can follow people for years, making it harder to save for a home, start a family or simply get ahead,” he said, according to RNZ. “This policy means more money to save for a home, start a family, build a business or just have a bit more breathing space.”
He put the pitch more bluntly to the crowd. “If you have a student loan and stay in New Zealand, under Labour you will owe less,” Hipkins said, 1News reported. “No one should have to leave New Zealand to build their future.”
Labour’s costings put the policy at $583.4 million over five years, with $439.5 million of that falling in the 2026/27 year, when the backlog of existing graduates would get their cut in one go. The write-offs would take $813.5 million off borrowers’ balances. Labour values that debt at $460.2 million on the Crown’s books, because some loans are never fully repaid and loans held by people living here carry no interest. After the first year, the party estimates the ongoing cost at nearly $40 million a year, as each new group of graduates reaches the three-year mark from 2031.
The party’s policy document gives two worked examples. A doctor starting on about $105,000 with a $120,000 loan could expect about $9000 to be written off after three years of working here. A teacher with a $40,000 loan on a starting salary of $66,000 would get about $2400 off.
Labour tertiary education spokesperson Shanan Halbert said graduates had done the hard work to earn a qualification and should not have to spend years watching their loan barely shrink. “Labour will cut that debt and give people a bit more freedom to get on with their lives,” he said.
Hipkins said the policy was fully funded, but that Labour would publish its full fiscal plan once the government’s books are opened before the election next week.
National was quick to attack it. Campaign chair Simeon Brown said the policy was “yet another enormous bill on top of more than $18 billion in new spending promises”.
“This policy simply shifts the debt onto taxpayers and means either higher taxes or more borrowing,” Brown said. “Tradies, farmers, truck drivers and other working Kiwis will be footing the bill so lawyers and other high earners with large student loans can benefit from another handout from Chris Hipkins.”
ACT leader David Seymour called it a bribe and said Labour could not explain how it would be paid for. “This policy reads like Chris Hipkins asked AI, ‘what will make people like me?’ What he needed to ask was, ‘how will we balance the budget?’,” he said.
The two major parties now have competing student loan offers on the table, and they work in quite different ways. At the end of August National promised to cut the compulsory repayment rate from 12 cents to 10 cents in every dollar earned above $24,128, also from 1 April 2027. That change was forecast to cost $438 million over five years, but it forgives no debt. Borrowers keep more of each pay packet and take longer to pay the loan off. National paired it with tougher settings for borrowers overseas, including an extra percentage point of interest on their balances.
Labour’s plan cuts the balance itself, but only for people who stay. Borrowers can still travel and qualify, as long as they remain classified as New Zealand-based under existing student loan rules for the full three years. 1News reported that Labour also says it would get tough on overseas-based borrowers, although the party has not matched National’s detail on that front.
The fees-free exclusion matters because of what happened in this year’s Budget. The Government scrapped the fees-free scheme in May, so students who enrol from 2027 will pay full fees from their first day. Graduates who got a free year under the scheme would miss out on Labour’s write-off, while those who paid all their own fees, including every new student from next year, would be in line for it once they met the three-year test.
The loan scheme is big enough that any change moves a lot of money. Inland Revenue counted 631,310 borrowers at 31 March 2026, 516,586 of them living in New Zealand, owing a combined $16.8 billion. The median balance was $18,302, and a 10 percent cut to a balance that size would be worth about $1830. Overseas borrowers held $4.5 billion of the total and account for 93 percent of overdue repayments, which is why both parties are trying to reward those who stay and squeeze those who leave.
Sunday was also the day National formally launched its own campaign in Auckland, with Christopher Luxon telling supporters that “the job isn’t done“. The student loan pledge was the new policy at Labour’s launch, where Hipkins also talked up supermarket regulation, public transport fare caps and free GP visits.
Voting opens on 26 October and closes at 7pm on polling day, 7 November, according to the Electoral Commission. If you are still weighing up where the parties stand on student debt, tax and the cost of living, try our voting tool to see which party best matches your views.
Would a 10 percent write-off keep you or your family in New Zealand, or is National’s lower repayment rate the better deal? Tell us what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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