ACT leader David Seymour has criticised Labour’s proposal to forgive 10 per cent of eligible student loan debt, arguing it would shift costs onto taxpayers without delivering...
ACT leader David Seymour has criticised Labour’s proposal to forgive 10 per cent of eligible student loan debt, arguing it would shift costs onto taxpayers without delivering immediate relief to borrowers.
Labour’s student loan proposal has become a point of contention in the election campaign, with ACT leader David Seymour questioning its cost, funding and potential economic benefits.
In a statement, Seymour estimated the policy would cost $1.2 billion and argued that Labour had not explained how it would pay for it.
He characterised the proposal as an accounting exercise rather than a solution to the cost-of-living pressures facing New Zealanders.
Labour, meanwhile, has presented student loan relief as a way to help graduates establish their lives in New Zealand and encourage skilled workers to remain in the country.
The disagreement centres on two questions: what the policy would mean for individual borrowers, and what it would mean for public finances.
What has David Seymour said?
Seymour’s criticism focuses on the estimated cost of writing off part of the country’s outstanding student loan debt.
He said approximately $12 billion was owed by borrowers living in New Zealand, with a further $4 billion owed by those overseas.
On that basis, he calculated that forgiving 10 per cent of the domestic balance would cost approximately $1.2 billion.
Seymour argued that Labour had not identified a funding source, noting that the party had already committed revenue from its proposed capital gains tax to healthcare.
He claimed the policy would therefore require additional Government borrowing to compensate for repayments that would no longer be collected.
He also argued that taxpayers, including people who did not attend tertiary education, would ultimately bear the cost.
These are Seymour’s criticisms of the proposal, rather than an independently established assessment of its fiscal effects.
Labour disputes the suggestion that the policy is unfunded
Labour has published a different costing from Seymour’s $1.2 billion estimate.
According to figures reported by 1News, Labour estimates its student loan policy would cost $583.4 million over five years.
The party’s figures indicate that the initial write-offs would remove $813.5 million from borrowers’ outstanding balances. However, the accounting value of that debt is lower because not every dollar outstanding is expected to be repaid.
Labour leader Chris Hipkins also told supporters at the party’s campaign launch that its wider programme would be funded, with detailed figures to be published after the Government’s pre-election financial statements were released.
Those assurances do not independently establish the final cost of the policy, but they provide an important distinction from Seymour’s claim that Labour has no way of paying for it.
What would borrowers receive?
Under Labour’s proposal, eligible people who have completed their studies and are still repaying their loans would receive a 10 per cent reduction from 1 April 2027.
Current and future students would qualify after remaining in New Zealand for three years following their studies.
Labour has also proposed clearing eligible balances of $2,000 or less.
For someone with a $30,000 loan, a 10 per cent reduction would remove $3,000 from their balance.
That would not necessarily mean an immediate increase in their regular take-home pay. Instead, the borrower would generally finish repaying the loan sooner.
Hipkins says the policy is designed to make it easier for graduates to build their futures in New Zealand, including saving for a home, starting a family or establishing a business.
The competing economic arguments
Seymour argues that improving productivity, encouraging private investment and reducing regulation would do more to address New Zealand’s economic challenges than writing off student debt.
He has also linked his criticism to ACT’s wider election campaign.
Labour’s argument is different. It says reducing student debt would give graduates an additional reason to remain in New Zealand and contribute their skills to the economy.
The two parties are therefore approaching the issue from different directions: ACT is emphasising the fiscal implications of debt forgiveness, while Labour is emphasising the financial position of graduates and its proposed incentive to remain in New Zealand.
Neither argument, on its own, establishes how many graduates would change their decisions about living and working in New Zealand because of the policy.
What remains to be established?
The central figures in the debate measure different things.
Seymour’s $1.2 billion estimate is based on applying 10 per cent to a broad measure of outstanding domestic student debt.
Labour’s reported $583.4 million figure is its estimate of the policy’s fiscal cost over five years, taking account of its proposed design and the accounting value of the loans affected.
The difference does not mean either figure can be substituted directly for the other.
A fuller assessment would require the detailed eligibility rules, the Government’s treatment of the loan write-offs and independently scrutinised fiscal projections.
For borrowers, the practical question is how much debt they would have removed and how much sooner they could finish repayments.
For taxpayers, the question is how the Government would accommodate the resulting reduction in expected loan repayments.
Those are the issues at the centre of the disagreement between Seymour and Hipkins as the election campaign continues.
Sources: Statement attributed to ACT leader David Seymour; Labour Party student debt policy and campaign-launch speech, 27 September 2026; 1News reporting on Labour’s policy costings.
