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September 6, 2010 | by  | in News |
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Collectors to come a-knocking for overseas student loan debt

The government is investigating the possibility of using debt collectors to tackle overseas student loan debt as part of a review of how student loans are administered.

In recent months Revenue Minister Peter Dunne has taken a rigorous approach in cracking down on student debt, with much of the attention focused on overseas debtors.
“The problem is with people who go overseas.”

Dunne says that many students evade repayments because they know that the government cannot track them while they are overseas. The majority of students living in New Zealand with student loans do not default on compulsory payments.

Before considering using debt collectors, the government had unsuccessfully approached other countries to discuss reciprocal recovery arrangements.

“To our great surprise the response we received… was ‘we don’t bother chasing our offshore debtors, why should we chase yours?’”

Labour Tertiary Education spokesperson Grant Robertson says he is concerned about the costs of introducing debt collectors.

“Ensuring that borrowers pay back their loans is important. However, using private contractors, especially debt collection agencies overseas raises the prospect of increased charges.”

This development is the latest in a raft of changes aimed at lowering overseas student loan debt. In August, Dunne said that the government will reduce repayment penalties for students living overseas as a way of encouraging these students to return to New Zealand.

The government is also planning to have online access to consolidated account information for students in April 2012, making it easier for all students to repay their loans.

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