20 Aug 2013

Bill will enable border arrests of tardy student loan debtors

11:40 am on 20 August 2013

Legislation allowing the Government to arrest at the border people who refuse to repay their student loan, and require those living overseas to increase their repayments, has been introduced to Parliament.

The changes were flagged in the Budget in May.

The bill gives the Inland Revenue Department new powers to deal with a small group who persistently refuse to repay their loans.

That includes the ability to issue an arrest warrant at the border, for the most serious cases.

Currently overseas borrowers make payments based on a percentage of their loan balance. The bill will change the percentage payments to a fixed amount so the loan is repaid more quickly.

The Government said on Tuesday that overseas borrowers are responsible for 80% of overdue loan repayments which now total about $535 million.

Revenue Minister Todd McClay said people will be arrested only in the most serious cases.

He said the IRD has a list of people who owe money and will be contacting them to remind them of their obligations and to arrange repayments.