Overseas-based Student Loan borrowers' repayment increases

Inland Revenue has collected more than $207 million in repayments since July last year from student loan borrowers living overseas – a 43% increase on the same period the previous year. 

Much of this success can be attributed to an increase in Student Loan Compliance funding in last year’s budget. 

As a result of the work we’ve been doing we’re also starting to see a more positive attitude by new borrowers, most who are meeting their payment obligations. 

The statistics

At the end of April this year there were 113,733 people with student loans who Inland Revenue believes were based overseas. Of this group of overseas-based borrowers (OBB), 71% are in default owing $2.3b (just over $1b is penalties and interest).

For around 24,000 OBB the debt is more than 15 years old. They aren’t registered for myIR and have no repayment plan in place. The outstanding repayments total $1.3b with penalties of $696m.

Progress

Inland Revenue’s Jane Elley says there’s been a focus on OBB who own property in New Zealand, borrowers who return to New Zealand regularly and those who have defaulted on an instalment arrangement.

“We’ve contacted more than 12,000 borrowers. 1,320 have entered repayment plans, and 960 people have fully repaid their overdue amounts. They have collectively repaid $9 million”, Jane Elley says.

“304 OBB own property here and during the first six months of our increased compliance work they paid up $1.7 million. For defaulters within this group who have refused to engage and resolve their default, further legal enforcement action will be taken which may include NZ based bankruptcy or charging orders over their properties.

“There were also 151 OBB with NZ-based investments, and between July and December last year we received payments totalling $84,000 from some of them. Again, there could be legal action ahead including taking deductions from their investments or bank accounts receiving interest income.”

Arrests at the border

Arrests at the border for unpaid student loan debt is a measure of last resort, but we do use it. 

Jane Elley says Inland Revenue can apply to the New Zealand courts for a warrant to arrest persistent overseas-based borrowers who knowingly default on their repayment obligations.

“New Zealand Customs informs us of any border crossings into New Zealand by OBB and airlines provide the travel information to us. We apply to the District Court and the police make the actual arrest. 

“Once arrested and taken before the courts, a judge can order the defaulter to make reasonable efforts to arrange repayment to Inland Revenue.”

Since July 1, 2024, we have told 89 defaulters they could be arrested at the border. As a result, 11 have taken action to avoid arrest by either making acceptable payments, entering repayment plans, or applying for hardship provisions.

One person was arrested at the border last month and they have since paid off their debt.

There are just over 150 overseas based borrowers, with a combined default of $15m, who we actively look out for in case they return to New Zealand.