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.
