Labour will wipe 10% off the student loans of New Zealand-based graduates next April if it wins the election, and clear balances of $2000 or less entirely.
Current and future students would get the same cut once they had stayed in New Zealand for three years after finishing their studies.
Party leader Chris Hipkins announced the policy at the party's campaign launch today.
"If you have a student loan and stay in New Zealand, under Labour you will owe less."
Speaking to a crowd of party faithful in Manukau, Hipkins also launched a blistering attack on National leader Christopher Luxon, calling him "not fit to be Prime Minister" and accusing National of "lying about tax, which is bulls**t by the way".
The first write-off, on April 1, 2027, would go to those who have finished study, are based domestically, are up to date with their repayments and did not benefit from Fees Free.
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.
The write-offs would remove $813.5 million from borrowers' balances. Labour values that debt at $460.2 million on the books, because some loans are never fully repaid.
For students still studying, the first write-offs would land in 2031, three years after the class of 2027 finishes. From then on, a new group of graduates would qualify each year.
Labour estimates that would cost future governments nearly $40 million a year.
'We want you here'
Hipkins pitched the policy as a way to stop young people moving offshore.
He told the launch: "If you're studying now, or you start in the future, stay in New Zealand for three years after you finish and we'll wipe 10% off your loan.
"Because if you study here, work here and contribute here, you should be able to get ahead here. No one should have to leave New Zealand to build their future.
"We want you here."
If re-elected, the party says it will also get tough on overseas-based Kiwis with student debt. (Source: 1News)
Labour tertiary spokesperson Shanan Halbert said many made little dent in their loans.
"People have done the hard work to get a qualification. They shouldn't have to spend years watching their student loan barely move," he said.
"Labour will cut that debt and give people a bit more freedom to get on with their lives."
Labour's policy document gives the example of a doctor who starts work on about $105,000 with a $120,000 loan. After three years working in New Zealand, they could expect about $9000 to be written off. Meanwhile, a teacher with a $40,000 loan on a starting salary of $66,000 would get about $2400 off.
Hipkins said the policy was fully funded, but that Labour would publish its fiscal numbers in full once the government opened the books next week.
At his party's campaign launch, he told the crowd he had never felt more strongly that National was a risk to the country's future.
"National will tell you they just need more time. More time. More time for what? More cuts? Even higher prices?
"Christopher Luxon promised to fix the cost of living. He had three years and he has failed. So ask yourself this - after three years of National, are you better off?"
'Another expensive handout'
National campaign chairperson Simeon Brown labelled the policy "yet another expensive handout" in a statement this afternoon, and said it would shift the debt onto taxpayers.
“New Zealand already has one of the most generous student support systems in the world, and students who borrow from taxpayers should be expected to pay it back.
"That’s only fair to the millions of Kiwis who work hard and pay their taxes.
"Labour’s plan will put New Zealand’s future at risk by saddling Kiwis with more taxes and debt in order to fund their wasteful spending," he said.
The National representative suggested Labour would have to raise taxes to pay for it.
“Despite what Chris Hipkins may believe, there is no magic wand that makes debt disappear. This policy simply shifts the debt onto taxpayers and means either higher taxes or more borrowing," Brown said.
National unveiled its own student loan policy last month.
Its plan would cut the compulsory repayment rate from 12 cents to 10 cents in every dollar earned above $24,128 from April 1, 2027.
National forecast that change to cost $438 million over five years.
It also pledged tougher penalties for overseas-based borrowers, including an extra 1% interest on their balances.
Under Labour's policy, borrowers can travel overseas and still qualify, as long as they stay classified as New Zealand-based under existing student loan rules for the full three years.
ACT leader David Seymour called the policy a "bribe".
"Labour is taking debt that is interest-free for New Zealand-based borrowers and shifting the cost onto the Crown's books," he said in a media release.
"In other words, all taxpayers take on the cost, including New Zealanders who did not receive the benefit of the tertiary education the loans paid for."
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