Govt to cut penalties for loan 'refugees'

Revenue Minister Peter Dunne. Photo / Mark Mitchell

The Government is to reduce late repayment penalties for student loan "refugees" staying overseas because of their student debt, Revenue Minister Peter Dunne says.

Speaking at Auckland University of Technology yesterday Mr Dunne said the student loan scheme "could burden New Zealand graduates on OE (overseas experience) with such enormous penalties they were effectively barred from ever returning to New Zealand".

"A measure soon to be introduced will reduce the penalties to address this issue."

Mr Dunne told the Herald legislation would be introduced in the next few months to give effect to changes in the way student loan repayments were managed.

That included a $30 million investment in an online repayments system intended to help tackle overdue repayments which totalled $283 million by March this year.

About a fifth of that is owed by expatriate borrowers.

"We have relatively low collection from students that are offshore," Mr Dunne said.

The new rules and the online system would make it easier for them to make repayment arrangements earlier with the Inland Revenue Department, "and in return for that there will be a bit of give and take over penalties".

However that was likely to be a first step.

"We're doing more work in this area to try and see if we can get better engagement with them and also keep a better record of where they are and what they're paying."

NZ University Students Association co-president David Do said any measures which lessened overseas graduates' debt burden and encouraged them to come home were welcome.

"Student debt is a big factor in people's decisions to leave New Zealand sooner and stay away longer."

GROWING BURDEN
* 85,093 student loan borrowers are living overseas.
* They owe about $56.6 million in late repayments.