The amount owing on student loans is predicted to grow to $15 billion by 2014, says Revenue Minister Peter Dunne.
At present, about 500,000 people owe $9.5 billion in student loan repayments.
An estimated 120,000 holders of student loans are in arrears or are failing to make repayments.
Mr Dunne says the Inland Revenue Department is planning to introduce an online system, similar to internet banking, which will be useful to those living overseas who have lost touch with the department.
He hopes the department will have the new system operating within a year.