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September 5, 2011 | by  | in News |
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Student loans – You can run, but you can’t hide (anymore!)

The Student Loan Scheme Bill was passed under Urgency by Parliament on 17 August, giving the Government new legal powers to recall millions of dollars in overdue student debt from students and graduates.

Passing with only the Greens and independent MP Chris Carter opposed, it gives the Inland Revenue Department the right to recall the entire loan and allow them to take defaulters to court.

However, the Government is insisting it is not a “harsh” move, but rather will only be used to target individuals who consistently renege on their repayment responsibilities, when all other reasonable efforts have been exhausted.

The legislation also introduced a series of administrative changes which, come 2012, will see further advancement in the online management of loans and an additional annual administration fee of $40.

While these are welcomed by NZUSA, co-president Max Hardy says that new and increased loan administration fees mandated by the bill are an “unnecessary tax”, which will only make it harder for students to pay off loans and do little to ameliorate the growing student debt—due to hit $12 billion this year.

The original Bill contained some clauses which would see a shift from annual repayment obligations to pay-period assessments. Concerns were raised as to how it would have affected those students who worked more during the holidays and less during the term, because they would have been expected to make high weekly repayments due to having a ‘high’ annual income.

However, in response to student lobbying and recommendations by the Select Committee, the original draft was amended to ensure exemptions are provided for part-time and full-time students in such situations.

The Bill is part of a wider effort by the Government to recoup overdue student debt, mostly targeted at Kiwis living overseas who collectively owe about $183 million. A recent social media campaign and direct contact with wayward borrowers has seen overseas repayments rise 45 per cent compared to a year ago.

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