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August 20, 2012 | by  | in News |
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Bounty Hunters


New Zealand expatriates who refuse to repay their student loans may be facing bankruptcy, but this could have important implications for students wishing to travel overseas.

Documents released by Inland Revenue reveal plans to take legal action against Australia- and Britain-based borrowers who have not met required student loan repayment targets. The IRD appears to be primarily targeting are those who have been overseas for long periods of time with no sign repaying or returning to New Zealand.

“They know they’ve got a loan, and we know that they are in a position to pay but simply not wanting to do anything about it,” IRD collections manager Richard Owen said.

As part of its legal action, the IRD may apply for several court orders, including taking a part of a person’s salary or seizing their assets.

Although no-one has yet had bankruptcy proceedings filed against them, the IRD has taken action against 360 people in New Zealand and 38 borrowers who live overseas, most of them in Australia.

However, President of the New Zealand Union of Students’ Associations Pete Hodkinson, says it is this kind of behavior from overseas borrowers that the government uses to justify increasing loan repayments and decreasing student allowances.

Earlier this year the National Government decreased the loan repayment holiday from three years to one year, a move Hodkinson described as a poor decision that ‘criminalises’ graduates who are overseas for longer, but who do intend to pay. The new payment system will have negatively impact on the majority of students who are not ‘problem borrowers,’ he said.

“The average time spent overseas on an OE is around 18 months… gaining international experience and bringing that back to NZ is hugely valuable.”

“Giving graduates an extra couple of years’ gap after graduation to get their feet financially planted on the ground is perfectly reasonable, rather than passing policy to criminalise them,” said Hodkinson.

One student Salient spoke to says the proposed threat of legal action from IRD would deter his plans to travel overseas as a graduate.

“I wouldn’t want to leave NZ with the burden of a potential court battle when I got home.”

The late Sir Paul Callaghan, a Victoria Professor of physical science, led an appeal in 2011 to encourage overseas borrowers to repay their loans and help the Christchurch earthquake recovery.

However the Government-supported appeal received backlash from borrowers who said the government had no right to ‘guilt-trip’ them into repayments.

“What I am asking for… is more consideration of what the effects of wide ranging, and briefly considered policy decisions will be,” Hodkinson said.

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