Clampdown on way for absent student debtors

By LIBBY MIDDLEBROOK and NZPA

Almost 12,000 students have fled overseas, leaving behind $175 million in unpaid loans.

The Government plans to track down the debtors who are living in Britain and Australia to make them repay their loans, which average $15,000 each.

"It's a big concern, we don't want students coming home, finding their debts have grown because of penalty charges," said a representative of Steven Maharey, the Associate Minister of Education.

Government figures show the amount of student debt of New Zealanders overseas increased 29 per cent over an eight-month period last year, from $136 million in March to $175 million by December.

Some opposition MPs claim the loans scheme is responsible for a dramatic rise in unpaid overseas debt, with many students leaving New Zealand to escape repayment of their loans.

"The real loss to New Zealand is not the $170 million of student loans but the loss of talented, motivated and intelligent young people from New Zealand's shores," said Act leader Richard Prebble.

Former students are supposed to contact Inland Revenue before travelling overseas to arrange future repayments of their loans. The tax department can dish out penalty charges of 2 per cent each month on outstanding loans if debts are ignored.

A 28-year-old New Zealander living in London, Mark, said he had not made a repayment on his student loan since completing a design degree in 1996 and leaving the country two years ago.

Mark, who declined to give his full name, conceded he could easily afford to make repayments on his student loan, earning £35,000 a year as an art director in the London advertising industry.

"I suppose it's kind of easy to forget about it when you're overseas ... Your debts where you're living become more important."

Mark, who has a British passport, discovered his loan had grown $4000 to $24,000 while on holiday in New Zealand in December. He was now considering paying it back, despite having no plans to shift home in the near future.

"I'm going to have to pay it back otherwise my parents will have a mare ... They keep on opening my letters from Inland Revenue."

Green Party education spokesman Ian Ewen-Street said the national loans scheme was projected to grow to $4 billion next year and $15 billion by 2015.

Mr Maharey's representative said the $175 million owed by overseas debtors did not "call into question the viability of the entire student loan scheme."

"What we're talking about is less than 5 per cent of debt."

It is understood Education Minister Trevor Mallard has already been in discussions with the British Government to develop a system for tracking down student debtors living there and talks with Australian authorities are in the planning stages.