Pitched as a way to help graduates pay off their loans sooner and build their future in New Zealand rather than overseas, Labour's student debt policy would cut 10% from eligible student loan balances for borrowers who stay in the country.

📋 Labour: Cutting Student Debt, September 2026 →

What it does

• New Zealand-based borrowers who have finished study, are still repaying and did not benefit from Fees Free would have 10% of their loan written off on 1 April 2027.
• Current and future students would get the same 10% cut after staying in New Zealand for three years once they finish study. Labour expects the first of these graduates to qualify in 2031.
• Graduates who owe $2,000 or less at the end of that three-year period would have the rest written off.
• Borrowers must be up to date with their loan obligations, and repayments would stay income-based.
• Labour's costings put the policy at $583.4 million over five years, with $439.5 million of that in 2026/27, then nearly $40 million a year once fully running from 2031. Labour says the cost reflects the fair value of the loans, which is lower than the $813.5 million that would come off borrowers' balances.

The debate

Labour leader Chris Hipkins announced the policy at the party's campaign launch in Manukau on 27 September 2026, saying no one should have to leave New Zealand to build their future. Finance spokesperson Barbara Edmonds said the write-down reduces the value of an asset on the Crown's books and keeps Labour within its fiscal rules. National's campaign chair Simeon Brown called it an expensive handout that shifts the debt onto taxpayers and means either higher taxes or more borrowing. ACT leader David Seymour called it a bribe and argued that all taxpayers would carry the cost, including people who never received the education the loans paid for. National's own student loan policy would instead lower the compulsory repayment rate from 12 to 10 cents in each dollar earned over the threshold, from 1 April 2027.