Student loan defaulters face passport hitch

HAMISH RUTHERFORD
Last updated 07:46 30/05/2013

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Staying away from New Zealand may not be enough to protect "hard core" student loan defaulters, with Revenue Minister Peter Dunne considering refusing to renew expiring passports.

As part of the Budget the Government announced new sanctions for student loan and child support defaulters including the threat of border arrests.

Yesterday appearing before the finance and expenditure committee, Dunne was asked if he had considered going so far as to refuse to renew passports.

"The issue has been considered," Dunne said.

"No firm decisions have been reached on that. There are some obvious potential advantages.

"There are also some disadvantages about what you might describe broadly as human rights issues - the rights of New Zealanders to a passport, but it certainly has been looked at, yes."

The threat of arrest was not being held over everyone behind on their loans, although there were thousands seriously behind on payments.

Inland Revenue (IRD) had identified some 9000 "hard core" loan defaulters, who collectively owed about $151 million, who could be subject to border arrests, Dunne said.

"We're not talking here about people who are simply behind on their payments, we're talking about people in serious default," he said.

Simply contacting people was enough in many cases.

Since Inland Revenue began tracking down overseas loan defaulters in 2010, about 70 per cent of those written to had entered into repayment plans.

This ranged from people saying "you've caught up with me, fair enough, I was wondering what I had to do," to anecdotal evidence of defaulters asking what their loan balance was and "writing out a cheque, there and then" Dunne said.

"Several hundred" had contacted Inland Revenue as a result of publicity surrounding the border arrest announcement asking "how do I improve my situation, so that fate doesn't await me?".

The "bush telegraph" was beating loud, especially in Australia, that action was being taken, while parents were contacting children asking what their loan status was.

"There's a whole mix of pressures," the minister said.

The IRD says that for every dollar it spends on chasing student loan defaulters, $12 is returned.

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