Loan blitz targets Kiwis in Oz

A total of $325 million is owed to IRD in overdue student loans. Photo / Mark Mitchell

New Zealanders living in Australia with overdue student loans are being tracked down in a bid to recover millions of dollars in outstanding payments - but not everyone is happy.

According to Inland Revenue, 35,000 Kiwis with overdue student loans are living overseas. The 3500 in Australia owe $15.2 million.

Starting this month, about 1000 of those expats will be targeted in a new campaign which aims to recoup that outstanding money.

The loan holders can expect to receive phone calls and letters from Inland Revenue asking them to get back up to date on their obligations. Those who don't comply could end up facing debt collectors and legal action.

Tertiary Education Minister Steven Joyce, who has been briefed on the start of the campaign, said there had been mixed reaction from the people Inland Revenue had so far targeted.

"They have had some good positive reaction. They have had some people who probably would rather they hadn't had the call and they had one person in particular who surprised them with their level of effrontery at having been approached."

Mr Joyce said that person was in a "particularly well-paying profession".

"They [Inland Revenue] will be following up strongly with that person."

Mr Joyce said engaging debt collectors would be a last resort but they might be used against people who just "thumb their nose" at attempts to have the overdue student loans paid off.

"Their concern will be with people who more than have the ability to pay but are acting as if it was a donation to their education and those are the people they will be taking the more sort of concerted, shall we say, stance with."

Inland Revenue's group manager of assurance, Martin Scott, said the initiative was prompted by a significant increase in overdue overseas student loan debt.

"Over the last two years this has increased from $114 million in June 2009 to $183 million in June 2010.

"Furthermore, the vast majority of borrowers comply with their student loan obligations and it is only equitable that those borrowers overseas meet their obligations."

Mr Scott said some of the 1000 people being targeted also had outstanding child support or tax debts.

Inland Revenue staff would initially make their own inquiries to contact people but if help was needed, it would be sought from external specialist tracing agencies.

"At all stages Inland Revenue will be encouraging borrowers to pay their loan balance whether in full or by entering into [an arrangement for paying by] instalments.

"Finally, Inland Revenue may consider legal action for those borrowers who are particularly non-compliant," Mr Scott said.

The trial will be evaluated at a later stage to determine if it can be extended into a full debt-recovery model for collecting overdue student loan debt from people in other countries.

In the red

* A total of $325 million is owed to IRD in overdue student loans, of which more than half involves people living overseas.

* $15.2 million is owed by 3500 expats in Australia.

* 1000 of them will be targeted in a new campaign to recover overdue payments.