Student loan defaulters still taking off

Student loan defaulters living abroad have so far eluded "border arrest", despite Inland Revenue's tougher stance on non-compliance.

IRD can request a "border arrest" warrant to stop borrowers who are significantly behind on their overseas-based repayment obligations from leaving New Zealand next time they visit home.

The default amount for overseas-based borrowers at the end of last month was $683.3 million, up on $535.1m at the same time last year.

Minister of Revenue Todd McClay said the increase was mostly because IRD's automatic repayment holiday, which previously hid many of those not paying, was reduced from three years to a maximum of a year.

IRD's drive to increase overseas borrowers' compliance started in 2010 and by the end of June last year, it had clawed back $70.2m.

In the year to last month, IRD received another $123.6m in payments.

McClay said borrowers could face the border arrest sanction, announced in last year's Budget, if they refused to start repayments or enter into an instalment agreement after repeated requests.

"[IRD] has implemented the systems and processes required to support arrest at border, although ... this is a last resort. Requesting an arrest warrant would follow numerous requests for the borrower to pay," he said.

"So far nobody has been stopped at the border."

The penalty for failing to meet overseas-based repayment obligations is a fine of up to $2000.

The Press