Tardy overseas student loan borrowers being caught out

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New measures to catch out tardy overseas student loan borrowers are working, despite arrears passing half a billion dollars in the last year, Tertiary Education Minister Steven Joyce says.

He made the comments after the student loan scheme annual report, released this month, showed overdue payments from overseas borrowers increased from $409.7 million at the end of the 2011-12 financial year to $535.1 million at the end of the 2012-13 year.

The extensive report also showed 710,968 New Zealanders had a student loan, with the total value of debt growing by more than half a billion dollars in 2012-13 to $13.562 billion.

Of those owing money, 4413 had debt of more than $100,000, including 967 who owed more than $139,999.

Mr Joyce said the report showed the situation was improving, but the Government was "not there yet".

"It was good that we collected a billion dollars in repayments in a year and the overseas-based borrowers initiative is starting to work quite well, but we are still in a scaling-up phase for that."

The initiatives which were working to get overseas borrowers to pay included hiring debt collectors in Australia and data-matching between government departments, so people living overseas could be contacted when they returned to New Zealand for visits.

It had also just started hiring debt collectors in Britain and was working on legislation meaning the worst loan defaulters could be arrested on the border - something that would be done sparingly.

"You don't want to see many, and frankly with child support [payments] you don't see many, but it does make people think, because they don't want to be stopped at the border."

The amount of overdue overseas payments was continuing to rise because of Labour's three-year repayment holiday policy, which had since been reduced to one year by the National Government.

"What was happening was that at the end of the three years, they were even less likely to start repayments, because they had long since got busy with their lives or whatever," he said.

Outgoing Otago University Students' Association president Francisco Hernandez said the ever-increasing loan balance showed the need for a review of the loan system.

It was also more evidence of the Government shifting more of the cost for tertiary education on to students.

"We'd like to call for a comprehensive review of the student support scheme, including looking at readjusting the parental income threshold for student allowances, raising the course related costs... and raising the living cost component."