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July 22, 2013 | by  | in News |
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Government Bluffing on Student-Loan Arrest Threats?

Two months on from the Budget, the Government has still not yet clarified key elements of the crackdown on student-loan borrowers.

The latest efforts to recoup costs from the loan scheme, introduced as part of the 2013 Budget in May, included increased repayment rates for overseas-based borrowers, and the threat of border arrests for the most serious offenders. Since then, there has been an increase in student-loan borrowers contacting the IRD to organise repayments despite no firm policy-implementation measures being announced.

Former Revenue Minister Peter Dunne announced the new efforts at the Budget in May, having overseen a number of efforts to increase revenue from the loan scheme during his tenure, including ending the voluntary repayment bonus and curtailing eligibility for the Student Allowance.

New Revenue Minister Todd McClay, who took over from Peter Dunne after his resignation as Minister in June, has not yet issued any statement regarding his plans for the loan scheme and did not respond to Salient’s questions.

It is still unclear what conditions would need to be met for a defaulter to be arrested at the border.

In May, Dunne announced that he had considered refusing to renew borrowers’ passports if they continued to ignore repayment obligations. The future of this policy is also unclear.

“The issue has been considered [but] no firm decisions have been reached on that,” Dunne said at the time.

“There are some obvious potential advantages.”

Among the disadvantages are what Dunne referred to as a “human-rights issue”, as New Zealanders may have a right to a passport. He said that despite these issues, the measure has “certainly… been looked at”.

$12 is returned for every dollar spent in student-loan repayment enforcement measures, according to the IRD.

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