The Dominion Post reported that the government is proposing an annual fee be charged to the 500,000 students and former students with student debt.

The fee, expected to be charged at about $50 a year on every person with student debt, is being floated as part of a package to try to claw back on the spiralling cost of the student loans scheme.

Tertiary education minister Steven Joyce said that the growth in borrowing could not go on without policy changes. Mr Joyce has repeatedly said that the current interest-free student loan policy is not financially sustainable, but that his government will not be scrapping it.

Instead, he is building a package of changes to the administration of student loans that currently includes this new annual fee for former students, as well as cutting loans for students who fail half their courses over two years, limiting the number of years a student can borrow, and limiting access to loans for non-New Zealand residents.

Mr Joyce said each of the measures was “at the margin”, but all added up to “a reasonable sum of money”

“The view I have taken of it is that I actually don’t think that is fair when you consider it compared with any other form of loan you have,” Mr Joyce said.

“We’re looking at an ongoing account fee which will be a flat amount and just helps to recover the costs of administering the loan system.”

The existing $50 fee on borrowing while studying, which has been the same since 1992, is likely to rise to $60.

The Dominion Post also reported that the government is putting pressure on Inland Revenue and Studylink, which administer the loans scheme, to find further savings.