Woman arrested at Auckland International Airport over student loan debt
The Government says arresting student loan debtors at airports is an "absolute last resort", but it's not a policy that will be changed any time soon.
The comments came after a woman was arrested at the border over her student loan, reportedly while trying to return to her home overseas.
Police confirmed the woman, who had been visiting New Zealand, was arrested as she attempted to fly out of Auckland International Airport on Friday.
Inland Revenue said it could not confirm any other details because of secrecy obligations under the Tax Administration Act.
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It is the first arrest over student loan debt in 2020.
Duty Minister Phil Twyford said an arrest at the border was an "absolute last resort" but the Government was not currently considering changes to the policy.
"Our priority is to make education more affordable," he said.
Police were alerted to the woman's presence at the airport via a border alert, police senior sergeant Laurie Culpan said.
Police arrested her on behalf of Inland Revenue.
Legislation introduced in 2014 gave Inland Revenue the authority to apply for arrest warrants for student loan defaulters leaving the country.
However, this is considered a "last resort" after all other avenues have been exhausted, an Inland Revenue spokeswoman said.
"The best advice we can give overseas based borrowers is to pay any outstanding amounts. If that is not possible, we encourage borrowers to talk with us about their situation.
"Our staff are always willing to help and we have various relief options available to help manage repayments for those who are in a position of hardship."
Three alleged student loan defaulters were arrested in 2016, one in 2017, two in 2018 and two in 2019.
The first arrest following the law change was Ngatokotoru Puna, the 40-year-old nephew of Cook Islands Prime Minister Henry Puna.
Puna had racked up $130,000 in student debt after completing a Bachelor of Arts at the University of Auckland, then moving to Rarotonga.
At the time, the New Zealand Union of Students' Associations said the arrests were causing borrowers overseas to become sick with worry.
Interest is not applied to the student loans of people living in New Zealand. People need to be in the country for at least 32 days in any 183 day (six month) period to be considered a New Zealand-based borrower.
Student loans start to accumulate interest once a person has left the country for more than 183 days.
The interest rate changes on April 1 every year. It is currently four per cent.
Borrowers overseas are required to make minimum repayments – based on their student loan balance – to avoid late penalties.
For a loan between $1000 and $15,000, the minimum is two payments of $500 twice a year – September 30 and March 31.
For a larger loan, the minimum repayments are bigger.
The total value of all student loans was $16 billion at the end of 2018/2019, according to the Student Loan Scheme Annual Report 2019.
In 2018, overdue student loan debt was $1.5 billion, with overseas-based borrowers owing 91 per cent of that.
The number of borrowers with overdue payments increased by 2.7 per cent in that year.
Revenue Minister Stuart Nash previously told Stuff the figure was a major concern.
He was worried student loan holders were leaving New Zealand not thinking much about their obligations and then "bury[ing] their heads in the sand".
"It's the worst thing people can do. If you have a problem give Inland Revenue a call," he said.