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May 2, 2011 | by  | in News |
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Student Escape Plans Thwarted

The Government has announced further cost-saving changes to the student loan scheme, setting their sights on those overseas who are failing to repay their loans.

Tertiary Education Minister Steven Joyce has indicated that there will be a push towards the collection of loan repay-ments in next month’s Budget, which could save several hundred million dollars over four years.

15 per cent of former students have moved overseas and they collectively owe $2 billion; 35,000 of whom are behind on their payments. Targeting them, Joyce has indicated debt collection agencies may soon be seeking out the wayward borrowers.

The Student Loan Scheme Bill, which would give the Inland Revenue Department the right to recall the entire loan and allow them to take defaulters to court, is currently before
the house.

A pilot programme in Australia using debt collectors has recovered about $1.5 million so far. Once jurisdiction is given, debt collectors will also be used in the UK.

While NZUSA Co-President David Do doesn’t object to requiring students to pay back their loans, he is calling for acknowledgement of how we got into this situation.

“What we need to remember is why some of our best and brightest have gone overseas in the first place. Some were pulled away by higher wages, but many were pushed away by their student debt.”

Further changes signalled by Joyce include reducing the current three-year loan repayment holiday—currently available to those on their OE—to one year, and introducing a four-year freeze on the income threshold for loan repayments.

Mature students’ access to student loans is also under consideration, with Joyce indicating they were looking at restricting those aged 55 and above to borrowing only for course fees and not living costs.

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