National eyes offshore student debt

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The Government is considering ways to get more student debt back from Kiwis living overseas.

"There are some big issues around how much we write off on student loans," Tertiary Education Minister Steven Joyce said last night. "And one of the reasons is this long tail of borrowers who go overseas and don't make their repayments."

Figures show overdue repayments from expats grew 111.1 per cent last year. And ex-students living overseas owe 20 per cent of the total amount  despite making up only 14.65 per cent of all borrowers.

The work to get more loan debt out of expats was revealed by Prime Minister John Key yesterday. Mr Key was challenged in Parliament over the Government's commitment to the interest-free student loans policy.

He said he stood by comments at Victoria University on Tuesday that there was "a better way of doing" student loans. This included a series of changes announced in the May Budget to tighten loan access.

"And also the minister of tertiary education is looking at ways to improve collection of loans from overseas borrowers," Mr Key said.

Mr Joyce last night said it was too early to say what options there were for recouping offshore student debt. Officials were investigating the characteristics of overseas borrowers and the Government would later look at how to get more out of them.

"There is a range of things, but I don't want to start floating them because then I'll have to start ruling them out. There is also where you put your effort in  is it Australia, or is it somewhere else?"

Recent changes to the scheme include requiring students to pass half their courses, a lifetime limit on borrowing, and a two-year waiting period for Australians and new permanent residents.

New Zealand Union of Students' Associations co-president David Do said it appeared National's commitment to the interest-free student loans policy was faltering.

"The Government should focus on reducing the need for such debt in the first place," Mr Do said.

Labour's Grant Robertson said Mr Key should "quit the fence-sitting routine" if he was planning to abandon the interest-free policy.

But Mr Joyce said: "We've all agreed that's not going to happen."

BY THE NUMBERS

Overdue repayments from overseas-based people grew 111.1 per cent last year from $54 million in 2008 to $114m.

Overseas borrowers represented 14.65 per cent of all. Yet, they owe 20.9 per cent of the nominal debt.

There were 82,337 overseas borrowers last year, up by 7.2 per cent from 76,777 in 2008