An expat and his student loan
I am one of apparently tens of thousands New Zealanders living abroad with a student loan.
I'll keep the balance of said loan to myself. But lets just say, I didn't pay much mind to it for the first two years I was out of the country.
Student loans are a curious beast. In New Zealand, I had to pay back 10 cents out of every dollar I earned above the repayment threshold.
As soon as I stopped working, this repayment obligation evaporated. When I then left the country and made no effort to start paying money towards this debt, I wasn't chased down. There was no barrier to me walking away.
The only downside was the knowledge that some file on some computer in some dusty room somewhere was keeping record of my loan balance slowly ticking upwards.
It is not that I don't respect the burden of this debt. It is more that the IRD and the New Zealand Government aren't the scariest of debt collectors. The parameters of compliance are vague. My student loan dies with me, from what I gather. I have no plans to return to New Zealand, but if I do, I can just go back to repaying 10 cents out of every dollar I earn (or past April 2013, 12). I've always viewed it a little bit like an 'education' tax.
The loan makes me aware of being tied to my country in a way that I kind of wish I wasn't, but then at the same time I'm not particularly intimidated by this.
It's a funny bit of chemistry.
The first two years after I left in 2010 followed a predictable pattern. I would think about my student loan once every few months, contemplate whether I should set a plan in action and then just forget about it, because that was by far the easier option and there were no immediate consequences either way.
But then the IRD started to go adopt a little more of what I'll call the "Soprano family henchman shaking down a bar owner who hasn't paid his protection money" approach.
In August 2012, the New Zealand Herald quoted the director of the IRD, Katrina Williams, as saying that they would "sink" defaulters and could potentially begin initiating bankruptcy proceedings against people residing in Australia with overdue student loans.
Fairfax News followed up on this in November with a story about 14 Australian-based student loan borrowers who could be bankrupted or stripped of assets.
Now I have every faith that for New Zealand to initiate such proceedings against me in America would be a far more complicated issue, because Americans love both the notion of their own independence and extremely complex bureaucracy.
But my Mum and I still found ourselves pontificating on Skype one day about a hypothetical scenario where I would get stopped exiting New Zealand after my visit home in March and asked to pay a certain amount of money toward my loan. This, I should point out, is an entirely fictional (as far as I know) situation that my mother and I invented off the top of our heads.
But who knows?
The situation for me got a little creepier when due to the dark arts of the Internet every time I was on the Stuff.co.nz site (and most of the time when I was on any New Zealand webpage) the sidebars were filled with IRD ads encouraging me to repay my student loan as an expat. The ads featured a horrified woman, with a swiftly increasing meter in the background tracking her rapidly expanding debt.
The ads got my heartbeat up, as I think they were designed to.
I forced myself to call the IRD, even the thought of doing so felt a little bit like going to a dentist.
It wasn't worth the worry. If I ignored the half an hour I spent on hold being reminded of some of the worst of the worst songs New Zealand has churned out in the past two decades (ugh, Feelers... but hey, remember K'Lee?), it was a completely painless experience.
I guess, despite my two-and-a-half years of non-compliance, I'm not quite a tier one offender yet.
I hadn't even incurred a penalty (I had however, occurred a little interest). My 'overseas repayment holiday' had ended in June 2012 and I hadn't missed a deadline.
For me, what it boils down to is this: I owe $3,000 to the IRD annually. Which is okay. It's probably in line with what I'd be paying over the course of each year in New Zealand (probably a lot less if you calculate in an appreciation of my earning potential over time). However the penalty for not paying this, a whopping .8 of a percent interest fine, is low.
Student loans are a serious bit of business. The collective balance of money owed to the New Zealand Government is $12 billion.
I do find it awkward that the government has historically tried to tread softly-softly on the issue for so long, treating student loans as some sort of non-debt, debt, that you sort-of-not-really-but-actually-do have to pay back, desperate to not offend students, and now they're getting tough and retrofitting their approach.
I also think that expats are an easy sector of people to turn into student loan villains, throwing a "hey, you owe us money" on top of the existing Tall Poppy Syndrome.
Steven Joyce remarked in 2011 that expats were 15 percent of total loan borrowers, but owed 55 percent of overdue debt. Really, what he was meaning was that from that year, of the 325 million dollars in missed interest payments from the past year, over half of the missed payments were from expats. Which makes perfect sense, because it has been made pretty easy to come overseas and put your head in the sand.
All I can really conclude on it is that as the New Zealand population continues to spread further across the map this is going to be an issue we'll be hearing a lot more about.
I'm not worked up about it. I don't doubt or quibble with this debt. But I can't help but feel that this is one awkward and colossal grey area, which is going to take a while to negotiate and change attitudes toward.
What do you think? What has been your experience?
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