Student loan arrest could prompt others to address debt
The first arrest of a student loan defaulter is likely to encourage others in the same situation to sort out their debts.
Ngatokotoru Puna was arrested at Auckland Airport on Monday when he tried to leave the country, after avoiding paying back his student loan debt for the past 20 years.
The 40-year-old nephew of Cook Islands Prime Minister Henry Puna racked up $130,000 in student debt after completing a Bachelor of Arts at the University of Auckland then moving to Rarotonga.
This is the first time the government has arrested someone in relation to student loan debt but Tertiary Education Minister says this enactment of a "last resort" is likely to prompt others in the same situation to "sort out their arrangements".
"There are a lot of people who seem absolutely determined to avoid all contact with IRD at all costs."
IRD had tried to contact loan defaulters but last year gave ministers the heads up about 20 student loan defaulters who could be arrested, Joyce said, adding that ministers were not forewarned about Puna's arrest.
Overseas-based borrowers accounted for $850 million in student loan debt, with 60 per cent of defaulters based in Australia, he said.
"My strong advice is to get in touch with the IRD...
"These people have had the benefit of an education in New Zealand, made commitments, and now they have to honour those commitments."
Joyce said saying they could not afford to make repayments was not a valid excuse for defaulting as IRD had a detailed hardship plan and worked with people who were in financial difficulty.
ACT leader David Seymour said paying off a student loan was a "significant challenge" for most people.
"Suffice to say, not much sympathy for a guy who ignores his loan, has five kids, then pleads poverty leaving taxpayers to pick up the tab," Seymour said.
Puna will be allowed to return to the Cook Islands after making a "significant" payment toward his debt, thanks to a $5000 loan from his parents.
The maths teacher said he felt like had been treated like a criminal and believed he hadn't done anything wrong.
As the head of the maths department at Rarotonga's national college he was only paid a $30,000 salary and up until 2010 he had been under the repayments threshold, he said.
An IRD spokesperson described the arrest as a "last resort" that followed "strenuous efforts" to contact the defaulter.
However, Puna said he hadn't spoken to the IRD and with a low salary, coupled with a $300,000 mortgage and five daughters, he would struggle to pay the debt back.
Puna came before Judge Charles Blackie in the Manukau District Court on Friday morning following his arrest.
Dressed in jandals, shorts and a t-shirt, he said he was still wearing the clothes he had been arrested in, saying he thought his arrest was initially a joke.
Puna represented himself before Judge Blackie, who asked him if he learned anything.
"I've learned I'm the first person to be arrested for this," Puna replied.
Outside court he said it had been the "worst experience" of his life.
Student leaders have criticised the government's decision to make its first student loan-related arrest.
The New Zealand Union of Student Associations acting president Laura Harris said the arrest could be "counterproductive" and scare expat students into not coming home.
Students, worried to return for funerals or family events, have contacted the union to express their fears, Harris said.
There was also an imbalance in the payment scheme, with amounts tied to the size of the loan rather than income, she said.
In July 2015, IRD said it was looking into 20 student loan defaulters for possible arrest if they attempted to return to the country, following the introduction of new legislation.