Taupō woman Fenella says the pension and her accommodation supplement barely cover weekly bills and rent. File photo. Photo: 123RF
Some people receiving the pension are being forced to choose between eating dinner and paying off their debt, after taking on student loans later in life.
One Taupō woman says she is still facing a $58,000 student loan from a business degree she took two decades ago.
Her repayments are now being docked from her pension and it is forcing her to sacrifice the basics so she can afford rent and power.
It has prompted calls for better guidelines on student loan eligibility and better communication between Inland Revenue and older students.
Taupō woman Fenella took out a student loan 20 years ago, to cover the fees for a business degree as she embarked on a new chapter in her life.
From 2007, her partner was helping her pay off her loan, but the relationship ended. One day she noticed $40 missing from her pension.
She said the pension and her accommodation supplement barely covered weekly bills and rent.
"I wasn't eating so I've been selling my possessions just to get cat food and food for me.
"Apart from the fact of a 44-year relationship ending like it did, it's been devastating."
To save on power, Fenella turned off her hot water during the day and during winter she wrapped up in blankets and only used one small heater.
"We're having to survive day by day without anything else happening to us."
Inland Revenue takes 12 percent of every dollar earned over $24,128 a year for student loan repayments.
A single person living alone on the pension, getting $32,604 a year before tax, is caught by this threshold.
Former prosecutor for the IRD and tax barrister Dave Ananth has been helping people with student loans to negotiate repaying their debt.
He has had 10 people receiving the pension in the past month asking him for help.
"Do I pay my student loan or do I deprive myself of groceries? That's not what the student loan scheme was designed for, at 70 you shouldn't need a spreadsheet to decide between dinner and debt."
Ananth said the student loan system needed to be re-looked at.
"Taking a loan is a responsibility, it's tax-payer funded so it's got to be paid back.
"I'm not in any way advocating that we write off things, I'm saying look at the system again, do you really need to give out this loan, can you avoid it or is there another way?"
Age Concern chief executive Karen Billings-Jensen said 40 percent of older New Zealanders only have superannuation as their income.
"When we see other fixed costs going up, like rates, electricity and insurance it's really hard.
"What we're seeing is people potentially cutting back on food, which is the only discretionary part of their income or budget."
Billings said she would like to see more consistency on how debt can be repaid without someone falling into financial hardship.
"Interested in knowing that the settings to ensure that for repayments of any debt to the government doesn't cause that level of financial hardship.
"It's probably wanting some consistency across IRD, MSD, wherever the debt might sit."
From the end of June this year, more than 23,000 people aged 65 and older had student loans. Of these, almost 6000 were based overseas.
In a statement to Checkpoint, Minister of Revenue Simon Watts said New Zealand super was taxable income and therefore subject to deductions for outstanding student loans.
He was not currently considering changes to the student loan system that fit within his responsibilities.
He said the government had measures to reduce the burden of student loan debt, such as minimum income repayment thresholds and no interest for most borrowers who stay in New Zealand.
But he said student loans still must be repaid.
The Department of Inland Revenue said they encouraged people who were having difficulty meeting their obligations to contact them.
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