Student loan defaulters worried

After a student loan defaulter was arrested trying to leave New Zealand NZ Herald reports Worried borrowers swamp IRD lines:

Inland Revenue has received a surge of inquiries from student loan defaulters worried they could be arrested if they return to New Zealand.

This isn’t a surprising reaction to the arrest. Up until now people with student loans have been able to leave New Zealand and ignore their loans with impunity.

One man who ignored his repayment obligations contacted the Weekend Herald from Australia and said he would now be scared to return for funerals or weddings.

Was he not concerned about defaulting on his loan until now? Obviously the threat of arrest is more of a worry but he should have had some feelings of concern about ignoring his responsibilities.

Unpaid student loans is a big problem. People who are overseas account for 90% of overdue loans.

The arrest policy, passed in March 2014, is the harshest in a range of measures to recoup debt from the 110,600 borrowers living overseas. Last year those based overseas made up 15 per cent of all borrowers, but 74 per cent of borrowers with overdue payments, and had 90 per cent of the amount overdue.

There were 5735 borrowers who each owed more than $100,000 last year. Those statistics do not indicate whether they are overseas, but in 2012 the IRD said most of the top 10 debtors were overseas – and each owed more than $290,000.

There’s some big money involved. I wonder about why people would clock up such large loans in the first place, and then think they can leave the country and ignore their debts.

Tertiary Education, Skills and Employment Minister Steven Joyce said if more money could be recouped from overseas borrowers, the cost of the scheme would be reduced significantly.

“The net cash cost of the scheme in the last year was down to $400 million – that is cash out, less repayments. In 2009/10, it was $771m.

“If we can get this overseas-based borrower stuff going, I can see us getting to a point where there is very little more going out [in loans] than what is coming back in [in repayments].”

The cost of unpaid loans impacts on New Zealand taxpayers, and it’s not fair on those who take out loans and are responsible enough to repay them.

Student unions criticised the border arrest policy as draconian and likely to make overseas Kiwis “student loan refugees” – unable to return home for weddings, funerals or other important events.

I think many had effectively already made themselves “student loan refugees”. This only really impacts on those who ignored their loans and kept returning to New Zealand.

The IRD has previously considered overdue borrowers for arrest if they re-entered New Zealand, but in each case the individual has agreed to repayments.

A simple solution – meet your obligations.

Accurate contact information is crucial – an arrest warrant can only be issued if a district court is satisfied a person is knowingly avoiding student loan repayment obligations.

Another simple way to avoid arrest, keep in touch with the IRD, which anyone should do if they owe them (us, the country) money.

If people who are overseas are worried about their student loans they should do what should have done all along, deal with them responsibly.

Leave a comment

31 Comments

  1. kiwi guy

     /  23rd January 2016

    All student debt should be cancelled.

    Fumigate the tertiary institutes to rid the creepy crawlies – no more Lesbian History or Queer Theory 101.

    That would save heaps of tax payer money being blown on Cultural Marxist brainwashing.

    Reply
    • Have you ever been in a University ?

      Reply
      • kiwi guy

         /  23rd January 2016

        Why do you ask?

        Reply
        • kittycatkin

           /  23rd January 2016

          It doesn’t sound as if you have any idea about what goes on in them. There is no Queer Theory 101 in any university I know.

          Reply
        • Last time i looked it seemed like lots of business studies and the like , I’m not sure they are hotbeds of lesbian history or queer theory ..or cultural marxism …

          Reply
          • kittycatkin

             /  23rd January 2016

            I have good friends who are gay and lesbian, and they have never mentioned such courses. There was nothing like that when I did my degrees at Victoria and Waikato. Maybe there is now 😀 I’ll ask a friend who’s a lecturer at Waikato 😀 😀 😀

            I can’t begin to imagine what Queer Theory is. :-/

            Reply
            • kittycatkin

               /  23rd January 2016

              There would be The Quentin Crisp Memorial Scholarship, and the building would be called Radclyffe Hall.

          • kittycatkin

             /  23rd January 2016

            You and I went to the wrong universities, Sean. I wish that KG would say where these courses are taught.

            Reply
      • Ratty

         /  23rd January 2016

        Google maps

        Reply
    • Mike C

       /  23rd January 2016

      @KiwiGuy

      “All Student Debt should be cancelled”

      Did you mean Student Debt or Loans?

      I am happy for Student Loans to cease … and for people to pay their own way.

      The Student Loan Scheme is a scam 🙂

      Reply
      • @ Mike C – You want an ultra-elitist tertiary education system?

        The student loan/student allowance scheme is simply a “rebranded” version of taxpayer funded education. Reworked. Fiddled, but essentially the same.

        The taxpayer pays one way or another, formerly by direct taxation, nowadays by ‘default’ loan debt servicing. No doubt student loan repayments recoup some money, but the principle is still only “sham user pays”. How can it be otherwise?

        Like many other ‘benefit’ and supplement payments, these are the fingers in the dyke of neoliberal, capitalist, free market corporatism, the necessary (minimal) social welfare components without which the ‘system’ will appear as it really is and very likely collapse.

        Its like this; assume for a moment ‘chemtrails’ are real – I’m not saying they are, just play along – the result of some ‘governmental forces’ seeding the atmosphere with substances to prevent the earth from frying because the biosphere is already fucked? We survive only because of this ‘benificent’ human intervention, which keeps everything functioning more-or-less as some people have decided it should. Crops grow. People slave.

        Stop the planes and we cook. [It’s not a pretty picture I’m painting, I know]

        Stop the loans, allowances, benefits and supplements and the ‘Zombies’ appear at the gate.

        If KG is half as intelligent as I think he is, he must have worked this out …?

        Reply
  2. Brown

     /  23rd January 2016

    When you contract to pay something you should do so but the Bible warns against usury. When it comes to that IRD are absolute masters with penalties and compounding interest that even the Mafia wouldn’t contemplate.

    Reply
    • Pantsdownbrown

       /  23rd January 2016

      Pay your debt to the govt as per the agreement you have signed and ‘hey presto!’ no penalties and compounding interest…….if the degree you spent all that money on is worthless (as many are) & you only really wanted a student loan for the interest free money to buy your first car then take that as a very expensive lesson in making correct life choices……….

      Reply
    • Ratty

       /  23rd January 2016

      IRD are reasonable.. as long you are reasonable with them

      Reply
  3. kittycatkin

     /  23rd January 2016

    I’d be be surprised if there was anything that the Mafia wouldn’t contemplate, including murder. The IRD doesn’t do that, nor does it deal in drugs and prostitution. Compounding interest is a normal thing and goes both ways; I am always agreeably surprised at how it mounts up in my savings account.

    If they didn’t have penalties, there’d be little incentive to pay back a debt. Interest compounds itself if it’s left to do so, that is not an IRD invention.

    I have heard that now it’s not so easy to keep borrowing and borrowing for student loans-so people shouldn’t now end up with massive loans. I have heard of Americans who never manage to pay theirs off.

    Reply
    • Klik Bate

       /  23rd January 2016

      Have you paid your student loan back yet kitty?

      Reply
      • kittycatkin

         /  23rd January 2016

        I said whether or not I had somewhere else-mine was in low single figures.

        I know that there were people who went whoopee and acted as if it was a money tree (what can you expect-they were young and the money was there for the asking)-and yes, for some it will have been a painful lesson. I hope that what I hear about the restrictions now is true. It must have seemed as if paying back time would never come.

        I remember when Fleur someone, the Vic Student Union president, borrowed and borrowed and borrowed ON PURPOSE and ended up with a massive debt (I forget how much, but it was eye-watering) and then claimed that she would never be able to afford to pay it back because her projected earnings were so low as a woman (totally doctored figures, of course) and it should be written off because she was a girl. She even went to court over this, I think, on some specious grounds-and the result was predictable. You’re in the real world now, Fleur.

        Reply
    • Ratty

       /  23rd January 2016

      Nor do the IRD get into money laundering schemes, nor do they tax avoid, nor do they tax evade

      Reply
      • Rob

         /  23rd January 2016

        Had dealings with them over the years. They’ve always been reasonable.

        Reply
        • kittycatkin

           /  23rd January 2016

          They avoid, they don’t evade; avoidance is legal, evasion is not. I remember the horror when I realised that the speaker I had to thank at a meeting was telling us how to do tax EVASION, and that I would have to say a few words about this and act as if it was a good thing to know without using the e-word. I have done tax AVOIDANCE with the help of IRD as they told me what I could write off against tax as a self-employed tutor. It’s a very different thing.

          They don’t put concrete gumboots on people, either. Or do machinegun massacres and have names like Slasher Morelli and Scarface Santini. .

          Reply
      • Let’s hope IRD are chasing the tax evaders as hard or harder as they’re chasing student loan repayment defaulters?

        Reply
        • Alan Wilkinson

           /  23rd January 2016

          You mean all those people who haven’t paid any net tax ever? That’s probably half the population, the most successful tax evaders by far. Does it include you?

          Reply
          • I don’t know Alan. But it is another clear example of ‘systems failure’, is it not?

            There are just so many fingers in the dyke …

            Reply
        • Pantsdownbrown

           /  23rd January 2016

          That’s a bit harsh PartizanZ – I thought you’d be in support of all those beneficiaries doing ‘cashies’ and hiding income………

          Reply
          • Harsh? I think beneficiaries (and low-income earners) contribution to tax evasion is minimal compared to big corporates and high income earners. eg Google agrees to pay $300million in back taxes to U.K. government (on RNZ as I write).

            Reply
            • Hell, that’s probably around 20 x Flag Consideration Processes!!!

            • Alan Wilkinson

               /  23rd January 2016

              … and just 0.1% of the amount NZ spends on welfare per decade. (The Google settlement covers the past decade.) So that will make an impact in the UK with 10 times our population, won’t it?

            • You’ve reached Pantsdownbrown’s level of own BS. The self-BS loop. Late night twaddle.

              Google is just one corporation, $30 million per year for a decade. Not an insignificant amount. How many such corporations? 10? 100? 1000?

              Yes, of course it will make an impact. It will make the impact it makes.

  4. Dean Stanley

     /  24th January 2016

    The NZUSA have claimed 40% of overseas student loan debtors have access to a non-New Zealand passport which means they cannot be arrested. Is this correct?

    Reply

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