More than $11 billion is owed to the student loans scheme - and an expert is warning the debt is having huge consequences.
Student loan debt grew by more than $3 billion in the past five years to $11,688,600,000 as of June 30, according to Inland Revenue figures released under the Official Information Act.
University of Auckland sociology professor Alan France said student debt was causing several knock-on financial and social effects.
"We used to talk about adulthood coming to fruition between 18 and 21 but now it's more between 25 and 35," he said.
"There's lots of long term evidence that shows you will earn more money if you go to university than if you don't, but these days that pay-off takes five to 10 years.
"Most people now go into low-skilled, low-paid jobs which are insecure when they leave university, so they wind up fighting large student debts on low incomes from jobs which don't have a great deal of long-term future prospects."
Graduates from low socio-economic backgrounds had it particularly tough, Professor France said.
"Parents from wealthy backgrounds are able to help kids in all sorts of ways; letting them live at home for free, helping them with a mortgage, different types of subsidised living, buying them cars and so on.
"Alongside that, there's a strong social network in the middle classes of New Zealand so they'll likely know people who can get their kids internships, jobs and other opportunities.
"Kids with parents who can't support them financially come out with bigger debt, work longer hours and borrow money from other sources where they can...
"At 30 [years old], there's still massive social inequality among people who have gone to university."
Regardless of background, buying houses and having families were increasingly difficult for young people, he said.
Wairarapa Free Budget Advisory Service manager Grant Howard said student loan debt was a burden for many people.
"Some young people have got more on their student loans than what they would on a mortgage, which is crazy," he said.
Hastings Budget Advisory Service co-ordinator Kristal Leach said even one-year courses could accrue large debts.
"Often when you think of student loans, you think of people doing a three year-long tertiary degree but we often see people that have done a short course like a one-year diploma, that still have a fair amount of debt," she said.
"We mostly see the younger generation. If they're working, some of it is paid through their taxes, but if they haven't found employment, it can be really hard.
"Long-term the debt can affect their ability to move forward in life with things like getting a mortgage for their first family home."
Student loan debt
Financial year Amount owing
2011 $8,414,400,000
2012 $10,306,200,000
2013 $10,687,500,000
2014 $11,213,400,000
2015 $11,688,600,000
--Source: Inland Revenue
Professor Alan France said debt-laden young people have been given several labels:
* The boomerang or yo-yo generation - as they leave their parents homes and then return
* Generation rent - as they will likely never buy a home
* Kippers - kids in parents' pockets eroding retirement savings
* And nesters - young people with no intention of leaving their parents' homes.
By Catherine Gaffaney of NZME News Service
