Should student loan defaulter have been arrested?

The person arrested for not paying his student loan is Ngatokotoru Puna, nephew of Cook Islands Prime Minister.

NZ Herald reported: Man arrested at airport over student loan debt is Cook Island Prime Minister’s nephew

He had been given a $40,000 loan while studying a Bachelor of Arts at Auckland University 20 years ago but said interest had seen it balloon to around $130,000.

He described his ordeal as “unbelievable” after an appearance at Manukau District Court today.

He described the day he got arrested as the worst of his life, “if you don’t count deaths”.

It would be highly embarrassing for him.

His wife, Diane, told the Herald from the Cook Islands that the IRD sent reminder letters to the wrong address.

She was audibly upset when speaking with the Herald, and said the arrest had come as a huge shock to the family.

Puna has lived in the Cook Islands for 13 years, she said. “We never had any contact from IRD about the whole thing,” she said. “They were sending reminders to the wrong address.”

It’s possible they were sending letters to the wrong address. But how does she know that?

Puna, who said he came from a family of “high achievers” said he was pulled aside by Customs staff and initially thought it was about his emergency passport, which he had obtained after losing his original passport.

The father of five daughters said his salary was about $35,000 and his mistake was that he had not contacted IRD when a payrise took him over the repayment threshold five years ago.

He said his plan was never to rack up a huge debt and then ignore it after graduating but accepted he was in the wrong for not keeping in touch with the IRD.

Anyone, especially ‘high achievers’, should know exactly what their responsibilities are if they have a $35,000 loan. They should also be aware of interest and changing balances.

It is tough on Puna to be in the spotlight as the first person arrested for defaulting on his loan, but it had to be someone.

But there are questions about how IRD has dealt with this, and how the law allows them to deal with it. Debts are usually civil matters, not criminal.

Graeme Edgler pointed out some things of concern:

Imprisonment for non-payment of debts is breach of international human rights laws. It is one of very few absolute rights.

Non-imprisonment for debt is one of the ICCPR rights left out of BOR.

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If a loan from the Government is unpaid, they should sue just like every other unpaid creditor.

And:

Who knew? People working in New Zealand’s bases on Antarctica are overseas for student loan purposes and will* be charged interest.

We arrested a Cook Islander for trying to leave New Zealand while in default on student loan obligations? The Cooks are part of New Zealand!

If anyone you know lives in the Cook Islands (or Niue, Tokelau, or Antarctica), and is being charged NZ student loan interest, please tell them that they can apply to be treated as being in New Zealand for loan purposes, so that they won’t be charged interest.

Puna stuffed up by ignoring his loan and his repayment obligations.

But has the Government stuffed up with the law that enabled his arrest?

And has the IRD stuffed up charging him interest, and for getting him arrested when leaving Auckland for the Cook Islands?

This is Wikipedia’s description of the status of the Cook Islands and Cook Islanders.

The Cook Islands is a representative democracy with a parliamentary system in an associated state relationship with New Zealand. Executive power is exercised by the government, with the Chief Minister as head of government. Legislative power is vested in both the government and the Parliament of the Cook Islands. There is a pluriform multi-party system. The Judiciary is independent of the executive and the legislature. The Head of State is the Queen of New Zealand, who is represented in the Cook Islands by the Queen’s Representative.

The islands are self-governing in “free association” with New Zealand. New Zealand retains primary responsibility for external affairs, with consultation with the Cook Islands government. Cook Islands nationals are citizens of New Zealand and can receive New Zealand government services

I guess it depends on the letter of the law.