|NEW ZEALAND'S EDUCATION
29 August, 2011
A successful government pilot programme to recover debt from student loan holders living overseas will be expanded to target a further 50,000 debtors in Australia and the United Kingdom, says Tertiary Education Minister Steven Joyce and Revenue Minister Peter Dunne.
The announcement follows an Inland Revenue pilot targeting 1,000 Australian-based loan holders which has, in the past 10 months, led to the recovery of more than $4.7 million.
The extended campaign will see loan holders across Australia and the United Kingdom contacted either directly or through their nominated contact person in New Zealand to pay their arrears or set up payment arrangements. Legal action will follow for cases of continued non-compliance.
Mr Dunne says the early stages of legal proceedings are already underway for a small number of borrowers as part of the ongoing pilot scheme in Australia.
?Legal action is a last resort. However, it will be taken against borrowers who have not responded to final demand letters and are making a deliberate choice not to repay their loans.
?Most New Zealand based-borrowers comply with their repayment obligations and pay on time, so it?s just fair for them to see that those who don?t are facing consequences, regardless of whether they are in New Zealand or overseas.?
Mr Joyce says improving repayment rates for overseas borrowers is a priority for the government as it works to deliver greater value for taxpayers who fund the student loan scheme and ensure it is viable in the long term.
?As of June of this year, those borrowers living abroad have loans of more than $2.3 billion, of which $289 million is overdue for repayment and unfortunately default levels are increasing.?
The median repayment time for overseas-based borrowers is 13.9 years, compared with 4.6 years for borrowers resident in New Zealand.
Mr Joyce says New Zealand?s student loan scheme is one of the most generous in the world, offering interest-free loans for all borrowers who remain in New Zealand.
?It?s important that borrowers understand that when they choose to access the loan scheme, they are also choosing to take on all the responsibilities that come with it ? this means meeting their repayment obligations.
?If they won?t voluntarily meet their obligations, we will be coming after them,? says Mr Joyce.