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March 3, 2014 | by  | in News | [ssba]

“And Stay Out!”

NZUSA and VUWSA have expressed disappointment with the passage of the Student Loan Amendment Bill, which will enable the IRD to arrest overseas-based borrowers at the border for failing to repay their Student Loan debt.

The Bill passed its third reading by 61 votes to 60. It will create a fixed repayment obligation for overseas-based borrowers, in line with obligations for New Zealand–based borrowers, and increase the repayment rates for borrowers with loans of more than $45,000.

It will also give the IRD the ability to seek an arrest warrant for borrowers who persistently refuse to repay their loans. Minister of Revenue Todd McClay has said that this would be done “only after Inland Revenue has exhausted all other efforts to persuade the borrower to make repayments.”

NZUSA President Daniel Haines has called the bill “gimmicky”, and said the Government’s lack of interest in reducing the level of overseas student debt is disappointing.

“Treasury advice is that the changes are actually likely to increase default rates, and officials from IRD have also said they were not predicting an increase in student repayments, despite proposing to spend $600,000 in one-off costs in updating airport screening capacity,” said Haines.

VUWSA President Sonya Clark said that the best way to encourage loan repayment would be to introduce positive incentives.

“Treating overseas-based borrowers like criminals is likely to lead to New Zealand students with student loans staying permanently away from New Zealand if they are worried or unsure about their loan status. We don’t think that it is effective.”

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