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The first two months of 2016 have seen $29.7 million in student debt from overseas borrowers being repaid. This figure is seven million dollars more than this time last year, a 31 percent increase.
The spike follows the January arrest of Cook Islands man Ngatokotoru Puna for failing to repay his $130,000 student loan (which has now been reduced to $30,000 following a giant fuck up on Inland Revenue Department’s (IRD) part).
IRD has seen correspondence rise since the arrest, with a 62% increase in emails, and a 55% increase in phone calls over January and February.
This has been welcomed by Tertiary Education, Skills and Employment Minister Steven Joyce, and Revenue Minister Michael Woodhouse.
“There was definitely a much higher level of activity at the start of this year, with IRD receiving over 20,000 additional repayments compared with last year,” Joyce said.
Joyce went on to say the IRD will “continue to target” overseas-based borrowers who default, and that “Inland Revenue believes that the publicity around the first arrest at the border has contributed to the increased activity.”
The government introduced a law in 2014 that allowed the police to arrest student loan defaulters at the border as a result of the high number of people overseas failing to pay their loans.
Of the more than 112,000 overseas-based borrowers, 70% are currently in default. Following Puna’s arrest, IRD has their sight set on other defaulters.
“Around 20 people are currently being actively monitored by Inland Revenue for possible arrest when they return to New Zealand,” Joyce said.
Despite this increase in repayments, some think it a harsh course of action, Tax Hub director Kristina Andersen said:
“I think it’s harsh. We don’t arrest people for other types of debts so I’m not sure from a moral point of view how you can justify doing it for student loan debts. But I guess from the government’s point of view it’s quite successful and because it’s been successful I expect there’s no impetus to change their strategy.”
Labour has also seen the government’s move to arrest people at the border as punitive, with Labour leader Andrew Little saying it was creating a barrier to study, and putting off other life opportunities like owning a home.
According to the New Zealand Union of Student Associations, at the beginning of last month student debt was estimated to be over $15 billion.