Arrest Causes Surge In Student Loan Repayments

The arrest of Ngatokotoru Puna, an overseas-based borrower who defaulted on his loans, at Auckland Airport in January has caused overseas borrowers to begin making repayments on their student loans, the Government says. 

According to a Government press release, overseas borrowers repaid $29.7 million to the Government during January and February this year, compared with $22.7 million in the same months of 2015. Additionally, communication to Inland Revenue has significantly increased, with emails up 62 percent in January and February and phone calls up 55 percent over the same period. 

Tertiary Education, Skills and Employment Minister Steven Joyce said, “It’s likely that a number of people were spurred into action. It’s just a pity that it takes these sort of steps to encourage some people to meet their obligations to taxpayers so we can continue to support future generations of students.”

The Government press release further noted that the “net amount repaid by overseas borrowers for the year ending June 30, 2015, totalled $184.7 million. Already this financial year repayments by overseas-based borrowers have reached $133.8 million at the end of February.”

Inland Revenue is currently monitoring 20 individuals for potential arrest if/when they return to New Zealand. Of 112,390 overseas-based borrowers, 70 percent are currently in default. Steven Joyce urged, “anyone with outstanding debt to contact Inland Revenue to organise a repayment plan, or if they’re unable to make repayments they can apply for a hardship grant.” 

The Government outlined that they have been running an overseas-based borrower compliance initiative since late 2010, which “uses a range of tools to target borrowers in default”, according to the press release. Michael Woodhouse stated that, “from July this year we will have an information sharing agreement with the Australian Tax Office which will allow information on student loan borrowers living in Australia to be shared with Inland Revenue. The majority of overseas-based borrowers live in Australia and this new agreement will be a significant step forward in speeding up the repayment of the estimated $3.25 billion borrowed by those living offshore.”

The issued press release said: “The programme… is on track to reach its current target of lifting payments by overseas-based borrowers by $100 million a year.”

This article first appeared in Issue 6, 2016.
Posted 10:32am Sunday 10th April 2016 by Joe Higham.