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August 9, 2010 | by  | in News | [ssba]

Government to Reclaim Runaway Loan Debt

Students escaping their loan debt overseas may soon have to face the long arm of the law.

The National Government announced last month that it was looking for ways to collect student loan debts from New Zealanders living overseas.

Tertiary Education Minister Steven Joyce announced that officials were investigating ex-students living overseas.

“There are some big issues around how much we write off on student loans and one of the reasons is this long tail of borrowers who go overseas and don’t make their repayments.”

Prime Minister John Key announced recently that reclaiming debt from overseas borrowers was one of the ways to improve the student loan system.

National has recently indicated their intention to review the management of student loan debt. Late last month the government was questioned about its commitment to the interest-free student loan policy.

The New Zealand Union of Students’ Associations Co-President David Do observed that National’s intention for an interest-free student loan policy seemed to be faltering.
“The government should focus on reducing the need for such debt in the first place.”

Several changes have already been made to student loans. This included requiring students to pass half their courses, a lifetime limit on borrowing and a two-year waiting period for Australians and new permanent residents.

Last year there were 82,337 overseas borrowers. In 2008, $54 million was owed by these borrowers, rising to $114 million in 2009. Those living abroad owe 20% of the national student loan debt.


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