The student loan system in New Zealand, to put it simply, is a double-edged sword.

While it allows numerous people access to tertiary education that they may not otherwise have, it also financially inhibits a lot of people from moving overseas – even temporarily.

Last week, news broke of a Kiwi woman detained at the airport for defaulting on loan payments while attempting to return to the US.

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She had been in New Zealand visiting her sick mother. This sparked a nation-wide debate about the student loan system, and how those returning home with a loan are treated.


Some are worried about speaking out: one UK-based borrower said she felt like she was in "student loan exile", too terrified to come home and visit her mother who is incredibly unwell.

As a Kiwi living overseas with a student loan myself, I understand how she feels.

When a graduate goes overseas with a student loan, they have six months to return to the country before they start accruing interest on their loan.

My student loan, for example, was almost $50,000 after four years.

As I am overseas, I have 4 per cent interest, or $2000, added to my loan amount every year.

Even if I pay the minimum annual repayment amount of 1.5 per cent, I won't even be making a dent in my original sum; nor will I even be close to paying off the additional interest – even after five years of repayments.

The added burden of interest on student loans means moving overseas has become a largely a privileged situation for anyone who has a tertiary education.

Molly Codyre, a New Zealander based in London, says New Zealand's student loan system is discouraging young people from living overseas. Photo / supplied
Molly Codyre, a New Zealander based in London, says New Zealand's student loan system is discouraging young people from living overseas. Photo / supplied

New Zealand is a country which raises its young people to aim for the world, teaches them that they can do whatever they want, and live wherever they want.

And yet, when it comes down to it, there are some major financial barriers to this. We have an amazing education system that is designed to propel us into the world, and a student loan process that facilitates this for all New Zealanders, but there is a major flaw - why are we clipping young people's wings just as they start to fly?


I am incredibly grateful that the New Zealand student loan system allowed me to get an undergraduate degree from the University of Otago, in turn helping me gain admission into a master's degree at the London College of Fashion. In 2018 I made the difficult decision to uproot my whole life, move to the UK, and immerse myself in the eat-or-be-eaten world that is the London journalism industry.

I was in an immensely privileged position being lucky enough to have parents who were willing and able to financially support me in making this decision.

Many others, however, do not have this benefit – the stress of student loan repayments can only add to the financial pressure that comes with moving overseas.

While my student loan gave me the platform to launch into this world, it has simultaneously financially punished me for making this decision to expand my learning opportunities.

In my experience, more often than not, young New Zealanders who move overseas end up returning within two to five years, bringing with them skills developed overseas in ways that aren't as possible in our smaller economy.

Far from a "brain drain", these people are bringing skills and economic benefit back into the country.

A close friend who moved to the UK a few years ago on a five-year visa says that, while she factors the repayments into her budget, she thinks "it's pretty unfair that our loan accrues interest, especially when we do make biannual repayments. It's as if we're being punished for moving overseas to enrich our careers."

We live in a small country. One that flourishes nevertheless, but one that does not have access to all the jobs, all the educational capabilities, all the opportunities, as larger, more populated countries.

Why wouldn't we want to encourage our young people to travel overseas, learn and develop their skills, experience a variety of cultures, and bring these teachings back home to New Zealand?