Kiwis Inland Revenue Department (IRD) has stated that the amount of money considered overdue by Kiwis former students living overseas has jumped by almost $150 million in the space of just a year.
The department noted that more than half of all Kiwis former students living overseas with a student loan are slackening their feet on paying their debts.
Figures, obtained under the Official Information Act, reveal that as of October 2019, the total amount of student loan debt from borrowers based overseas was at $3.5 billion.
The Inland Revenue data also revealed that the total value of all student loans on the government’s books is $16 billion, showing that over 20 percent of all loans are held by people living overseas.
According to recently released IRD Kiwis former students loan data, 54 percent of overseas-based borrowers are not taking “positive actions” towards repaying their student loan.
This includes no form of communication with the IRD about the debt or making arrangements towards payment of the debt.
Notably, the IRD has blamed the “economic and political uncertainty” for the increase in overdue payments or total refusal of Kiwis former students in paying the loan.
Also, the revenue Minister Stuart Nash has issued a warning towards those falling behind on payments debt loans.
Kiwis former students reaction
Student loans are interest-free if the borrower lives and pays off their loan while living in New Zealand, and it’s automatically deducted from the former student’s salary.
Many Kiwi former students live in the UK, and a woman who estimates her student loan now more than $100,000 said she’s a student loan exile.
According to her, she’s unable to come home to take care of her mother because she fears being arrested at the border.
Notably, recently the first student loan defaulter was arrested at Auckland Airport, which was possible because of the 2014 law change. Although, many former students and current unions have condemned the move, saying it would make others “scared to come home.”
This is the situation with Brad, who did not want to reveal his last name noted it might cause himself and his family.
Brad said he left New Zealand for Melbourne in 2007 due to a lack of employment opportunities, after gaining a Bachelor of Arts with Honours in performing arts.
His loan is now at $108,000, with interest accounting for more than half of the debt.
Brad said he made an arrears payment of $500 each month, an arrangement made with IRD, but can’t afford the $5000 minimum annual repayment.
Another woman, who asked not to be identified, said she had been back to New Zealand only twice, once when her father died and when she helped her mother move home.
She added that news of student loan defaulter being arrested at Auckland Airport recently had left her more convinced she couldn’t come home.
Government agency reaction
Shane Reti, National’s Tertiary Education spokesman, said Kiwis living overseas have a responsibility to pay back their loans
Act leader David Seymour said he had no sympathy for those who are “ripping off” ordinary New Zealanders by not paying back their student loans.
He noted that he fully supported loan defaulters being arrested at the border.
Seymour said:
They don’t deserve a free ride. They have borrowed from a very generous scheme and have gone to some of the best [universities] in the world.
However, Revenue Minister Stuart Nash said the arrest of student loan defaulters at the border is used as a very last resort.
He also noted that the IRD works hard to get in touch with borrowers living overseas to make sure they’re aware of their obligations to repay their loans.
