Student loan defaulter arrested

A student loan defaulter has been arrested when trying to leave New Zealand after a visit here. They have lived overseas since 2004 and are reported to have ignored requests to repay their student loan.

If people living in New Zealand have student loans and earn money they are compelled to repay their loan via Inland Revenue, it is deducted from their earnings.

But many ex-students have left the country and some have avoided paying their loans back. Regardless of views on the student loan system they have taken on a loan that they know they have a responsibility and legal requirement to pay it back.

NZ Herald reports Airport arrest for student debt.

Kiwi living overseas who ignored requests to repay his student loan has been arrested at the New Zealand border after returning home for a visit – the first time the hardline sanction has been used.

The man was detained on Monday while trying to leave the country. He has lived overseas since 2004 and has student debt of more than $20,000.

A law change in March 2014 means student loan borrowers who are well behind on repayments and ignore requests from Inland Revenue may have an arrest warrant issued, stopping them from leaving New Zealand until they resolve their arrears.

This is the first time someone has been arrested under this law.

An IRD spokesman said its powers to arrest at the border were used as “a very last resort”, and followed strenuous efforts to contact the borrower and make repayment arrangements.

Serious defaulters are first contacted to discuss repayment options and are given time to repay some of their loan. Relief from repayments can be granted for hardship reasons, but the man arrested had not made any such application.

IRD generally uses the courts as a last resort when trying to recover tax owed as well.

An arrest warrant can be issued if a court is satisfied that the person has committed the offence of knowingly avoiding student loan repayment obligations, and is about to leave NZ.

A district court can then make subsequent orders that include paying the amount in default, making arrangements for payment, providing security for the payment, not leaving the country without permission, and surrendering travel documents or tickets.

I presume the person arrested was aware of these possibilities, but they chose to return to New Zealand for a visit. If news of their arrest becomes known to other student loan defaulters overseas they are likely to not come back here. But it is also likely them to reconsider their refusal to repay their loans.

The hardline arrest policy has been criticised by the University Students’ Association as likely to make “student loan refugee” into a permanent status, rather than encouraging people to meet their obligations.

But is sounds like they are already ‘encouraged’ to ‘meet their obligations’. If they refuse to do that surely there should be the possibility of consequences.

The option of arrest at the border was modelled on a law that is used to capture people who default on child-support payments. It was designed to target the worst offenders and act as a deterrent to others.

Criminals and alleged criminals can also be arrested if trying to leave the country.

An information-sharing agreement with Australia, expected to start this year, will allow for the exchange of contact details of Kiwi borrowers living in Australia.

Loan defaulters living in Australia will have more difficulty avoiding repayment.

According to the latest student loan scheme annual report, produced by the Ministry of Education, the amount repaid directly by overseas-based borrowers was $184.7 million in 2014/15, up from $158.1 million the previous year.

So many people with student loans living overseas are repaying their loans. And an increasing number of them are repaying their loans. As they should.

Perhaps University should have a compulsory paper – Student Loan Responsibilities 101.

Leave a comment

45 Comments

  1. Klik Bate

     /  22nd January 2016

    Aha – at least that explains how the notorious murdering paedophile prison escaper Philip Smith managed to slip through Customs.

    Not only was he wearing a bad wig, he didn’t have a Student Loan!

    Still, he only cost NZ taxpayers a mil or so to get him back.

    Reply
  2. Henry

     /  22nd January 2016

    Good..I have to pay mine back so should he…

    Reply
  3. Pantsdownbrown

     /  22nd January 2016

    As a last resort I applaud the action – The University Students’ Association stance on this matter is rubbish as you can only “encourage people to meet their obligations” for so long before you realise certain individuals are never going to do so. If they are too scared to re-enter the country so-be-it – that’s the penalty to be paid for taxpayer theft.

    Reply
  4. Blazer

     /  22nd January 2016

    I think they should introduce retrospective payments for those who went before and had free tertiary education and have since acquired wealth.

    Reply
    • Jesus Blazer! I occasionally kid myself I’m smart. That is about the best idea I’ve seen written down in an awful long time; certainly all the time I’ve been at YourNZ. It might be familiar to some (I’m imagining Alan) but I’ve never encountered it before.

      My little envy troll is screaming, “Why didn’t I think of that”!!! Wahhhhhhh!!!!

      So simple. So beautifully, beautifully undermining.

      In a ghastly, somewhat analogous sort of way, how perfect for the day the Military Tunneler’s Monument is unveiled in Waihi.
      Those men, of course, being at the heart of early NZ union organisation and Labour movements; and, by all accounts, largely indifferent to military discipline.

      Thank you. Sincerely. That’s all I really want to say. Thank you.

      Reply
      • Pantsdownbrown

         /  22nd January 2016

        There has never been ‘free’ tertiary education in this country – someone still had to pay for it…………its a lefty myth.

        I for one don’t believe people that go straight into the workforce (many to do lower paying jobs) should then be forced to fund students (through their tax) to go and shag around in university and study a (often worthless) degree for free. So much for lefties looking out for the little man in this country…….

        Reply
        • In all seriousness it needs some balance, student life needs to be cheaper, but not free, alternatively bond people in high skilled jobs in NZ by having slightly negative interest rates on loans for as long as they stay in NZ, like Doctors etc.

          Reply
          • Pantsdownbrown

             /  22nd January 2016

            I’d go further and also base the % amount of the student loan on the need for that particular degree, so in essence you will get more funding from the govt if the job you are aspiring to is in need of workers. This would stop all the students undertaking pointless degrees at taxpayer expense where their job prospects using said degree is close to zero.

            Reply
    • Ratty

       /  22nd January 2016

      I see no problem with this suggestion… as long as those who were paying 66% marginal tax are refunded as well

      Reply
      • kittycatkin

         /  22nd January 2016

        And those who had mortgage rates in double figures in the 80s.

        And how about those whose taxes would never have covered their superannuation, even if they’d been put aside and used for nothing else ?

        Reply
    • kittycatkin

       /  22nd January 2016

      I notice that Blazer offers no suggestions as to how this should be done, or what it would cost-which would probably be far more than would be recovered, if any government was stupid enough to try it.

      Reply
      • Ratty

         /  22nd January 2016

        Im picking he screams “Bloody Boomers” everyday

        Reply
      • Pantsdownbrown

         /  22nd January 2016

        I don’t think Blazer was really serious but just wanted to point out that prior generations had ‘free’ education – even though it has never been ‘free’.

        Reply
        • kittycatkin

           /  22nd January 2016

          I fear that he was. He doesn’t strike me as a person with much sense of humour or irony.

          Reply
    • Alan Wilkinson

       /  22nd January 2016

      You mean when only 5% of the population went on to University and those who did supported themselves with holiday and part-time jobs because there were no student loans? I guess you would like us to pay back the scholarships we won too – obsolete elitism nowadays?

      I’ll do a trade though. Since we’ve funded $14B of outstanding student loans though we’ll retrospectively charge commercial rates of interest on that and all your historic student debt and we’ll take that off our account. Somehow I think you’ll find you owe us. You cheque will be in the mail?

      Reply
  5. J Bloggs

     /  22nd January 2016

    I’m 100% behind the IRD on this one. The person in question has had 10 years to make payments or even make an effort to keep up with thier obligations. It’s quite clear they had no intention of ever repaying the loan, and have now been caught out. Throw the book at them!

    And this is speaking as an ex Student Association official who protested against the Student loan scheme, as it was, in my day (and yes, I’m still paying back my loan)

    Reply
    • Joe Bloggs

       /  22nd January 2016

      Moreover, he is in a position where he can afford to make repayments.

      AS well as that his original loan was only $40,0000. Had he made even the slightest effort to repay the debt, he would not now be facing a debt of $130,000.

      Perhaps repaying his loan might have been a consideration rather than choosing to take on a $300,000 mortgage.

      – Joe Bloggs (no relation)

      Reply
    • kittycatkin

       /  22nd January 2016

      I haven’t paid mine back, but it was only a tiny one, It can come out of my estate when I die.

      Reply
      • Klik Bate

         /  22nd January 2016

        Or when you try and leave the country for a holiday 🙂

        Reply
      • Pete Kane

         /  22nd January 2016

        Unless there’s been a legislative change, you would have to specify repayment in your will, as the debt dies (or certainly did) with you. regardless of your estate’s value.

        Reply
  6. Nelly Smickers

     /  22nd January 2016

    When I first met my husband, he had a 40k Student Loan and was studying for a Degree in Chemical Engineering. Lucky for him, my job as an A&E Nurse has seen us get it down by half..

    Every time the matter gets brought up with the family, my mum reckons he’s about as smart as bait. She maintains the only thing Wayne learned from his 4 years doing the C.E. degree, was how to convert alcohol into urine..

    Reply
    • kittycatkin

       /  22nd January 2016

      Not the other way around ?

      Reply
      • Nelly Smickers

         /  22nd January 2016

        @ kc.

        Unfortunately, no.

        Apparently though, the Te Whare Wananga at Manukau, do offer a 3 year degree course in that particular science. but one of the qualifying criteria is that you have to be fluent in Te Reo.

        Other than ‘hey bro’, and a great impression of Billy T’s laugh, Wayne just misses out on the basics required to get the 80k loan. 😦

        Reply
    • Oliver

       /  22nd January 2016

      A degree is over rated. It’s a money making scheme. You do all the work and than you have to pay for the privilege. You can learn for free at the library and by living life.

      Reply
      • Alan Wilkinson

         /  22nd January 2016

        Some degrees are over-rated, others not. Like anything everywhere, excellence is where you find it and second rate is commonplace. And a degree is a starting point, not an end point.

        Reply
  7. Oliver

     /  22nd January 2016

    Don’t pay back your loan. Education should be for free. Let the capitalist take care of the bill.

    Reply
    • kittycatkin

       /  22nd January 2016

      You mean the taxpayer-who is everyone who pays tax, even shopworkers.

      Why should education be free ? (paid for by everyone else)

      Reply
      • kittycatkin

         /  22nd January 2016

        And it’s ‘free’, not ‘for free’.

        Reply
      • Oliver

         /  22nd January 2016

        You have to pay tax regardless. Wouldn’t you want it to go towards our children’s future. I would rather have my tax money go to some kids education, than to some politicians perks like business class flights.

        Reply
        • Pantsdownbrown

           /  22nd January 2016

          All we would be doing is adding more tax to the existing tax take….I’d rather the person that leaves school to take on a job pays as little tax as possible rather than be forced to fund some self-entitled student who thinks money is ‘free’, does a pointless degree and then skips the country.

          Reply
          • Oliver

             /  22nd January 2016

            Students go overseas to earn more money to pay of their student loans. If it was free then we would keep the talent here with out having to import foreign nationals to mend the skills shortage.

            Reply
            • Ratty

               /  22nd January 2016

              We have done that Oliver….

              Didnt work… they bolted overseas quicker than you could say “lower tax rates..”

    • Alan Wilkinson

       /  22nd January 2016

      Socialist leach speaks with forked tongue. Only capitalists need good education so they can employ useless socialist leaches.

      Reply
      • Oliver

         /  22nd January 2016

        If it wasn’t for socialist, your kids would be working in a dangerous factory, 18 hours a day for 50 cents a week. Have a think about that before you criticize socialist.

        Reply
        • Alan Wilkinson

           /  22nd January 2016

          Actually you can thank a mill manager – Robert Owen, and the classic liberals who governed the UK until WW1 and who implemented a sequence of labour law reforms dating back to the Factories Act of 1833.

          Reply
          • Oliver

             /  22nd January 2016

            It wasn’t till the 1940 that child labor was abolished in the west. It was a victory for socialism. The capitalist fought hard to keep child labor. Now capitalist out source child labor in third world countries.

            Reply
            • Alan Wilkinson

               /  22nd January 2016

              And now unemployable hopeless and useless youth are the final triumph of socialist welfarism. Our kids learned to work early so now can fund useless socialist leaches.

            • Rob

               /  23rd January 2016

              And by the sounds of it, you are old enough to have recieved a close to free university education. Correct me if I’m wrong. Doesn’t absolve those who have taken loans. Sign the paper? Pay the bill, in full.

            • Blazer

               /  23rd January 2016

              put your plastic sword away Wikinson,you know very well the parasites of society,the vampire squids etc are to be found in the crony capitalist financial world of central banking.

    • @ Oliver – Arguably, in the private sector, the capitalist employer reaps profit on the employees’ self-funded, educated labour and, since its hard to argue that anyone’s income tax or company tax goes directly towards education any longer, your suggestion is not without some merit.

      The same might be applied to the Public Service? A massive expansion of corporate and public service ‘scholarships’ and ‘sponsorship’ a la the United States education system?

      The U.S. system, which is about as worth NZ aspiring to as women aspiring to be men, (Timothy Leary), has some distinct “systemic advantages”, among them it a) favours Conservative or “convenience” education rather than Liberal education: Pure employment directed education: Expedient or Strategic education replaces Scholastic Pedagogy (its already mostly too late for this in NZ*) and b) favours Compliance. As in the News Media, we don’t bite the hand that feeds us. c) favours funders influencing or even dictating cirricullum (and research?) d) favours the rich anyhow, which can only be ameliorated by “affirmative action”.

      *Hence it is “privatised” education that has led to lowering standards, not some imaginery infiltration by the “socialist left”. The fault is loss of historic continuity for the sake of a capitalist, corporate ethos. [Arguably again, another example of “unenlightenment”? The State wrestled education away from the Church but has now returned it to the Corporation, a belief system every bit as pervasive? Hence corporate “universities” can offer ‘studies’ of dubious practical usefulness or pedogogic erudition with impunity, just to make money]

      These things are not inherently ‘bad’ in themselves. Most people undertake an education to get a job. That’s fine. And I guess you can still just “follow your interests” and hope to mould yourself into a job later after graduating? (I did that). Fear of the student loan will prevent many from doing this though.

      What this means, as I see it, is people are much less likely to train in tangental things like philosophy, ethics, liberal arts, other abstract disciplines and perhaps social sciences, so that commentary on our society is more likely provided by [vested] economists or policy analysts rather than ethicians or social psychologists (who will be head-hunted by the advertising industry!) [I exaggerate for effect]. Indeed, since it is those taking things like “gender politics” or “ethnic minority studies” who are upholding the liberal education tradition, it should not surprise us they are the “alternative voices”, the social commentators most challenging “the systems” orthodoxy.

      The all-important independent, rogue or rebel intellect, emotellect or commentary function – the lone voices – are reduced and may even become absent. The remaining ‘rogues’ are much more easily isolated with accusations of bias or political affiliation, even when their accusers are exactly that too (or that alone). Women, gays, sexual and ethnic minorities, often the most independent, self-realized and “free” individuals, can easily and equally be “grouped” and accused of anything from ‘weirdness’ to Cultural Marxist and Feminist conspiracies. These are not the dangerous “masses”, their accusers are.

      Dennis Potter’s critique of Thatcherism is an example of a liberal artist providing ascerbic social commentary.

      Systems Justification becomes the prevailing norm, the status quo, the default position.
      Education become Right-Wing Education?

      “Change” becomes structural only, “branding”, management and “delivery”, a mere pretence of real change or worse, a disruption technique to distract people from the real issues, rather than real ideological advancement?

      Reply

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