1 Mar 2015

Agreement aims to recoup unpaid student loans

2:42 pm on 1 March 2015

Tax officials in Australia and New Zealand have agreed to share more information to try and help New Zealand recoup millions of dollars in unpaid student loans from people living in Australia.

But the agreement does not apply to Australians living in New Zealand, who are only required to repay their student loans whilst living in Australia.

Prime Minister John Key and Australian Prime Minister, Tony Abbott, announced the information sharing arrangement at the annual leaders meeting yesterday.

More on this story

Revenue Minister, Todd McClay said under the agreement, tax officials in Australia would be able to provide up-to-date contact information to their colleagues in New Zealand.

"We know that when we contact people, they start paying. Approximately 70 percent of overseas borrowers we contact begin to repay their debt. This new arrangement with Australia will ensure we contact many more borrowers," he said.

Tertiary education minister Steven Joyce estimated "some $686 million of student loan defaulted debt is held by borrowers living overseas, and an estimated 65 percent of those people reside in Australia."

He said the Government's plans for recouping money that was owed went beyond Australia.

"We're still working on further arrangements in the UK and other parts of the world, we've set up payment arrangements to make it easier for people to pay off-shore, but we're just continually working on different ways of making it easier for establishing those contact details, UK is about the second largest destination."

Mr Joyce said 70 percent of overseas borrowers began to repay their debt after being contacted by the IRD.

But the head of the Union of Students' Associations, Rory McCourt, - which represents 400,000 students at university's, whanaga, polytechnics and those in trades training - said that was a fraction of the $15 billion of student debt, most of which was held by people living in New Zealand.

"Students are taking on too much debt and that's a concern not only for individuals, being burdened with debt for their lives, but for the country as well.

"It's interesting to note that New Zealand students on average are taking on the same amount of debt as their American counterparts, which I think would concern a lot of New Zealand parents and grandparents."

Mr McCourt said increasingly tertiary education in New Zealand was a private burden, which was being pushed onto students and their families.

He said the Government should be contributing a fair amount to students' education.

The union wanted funding to remain at its current level or increase, but does not want funding to fall any lower which is the risk at the moment with the underfunding of the tertiary education sector.

But Mr McCourt said they believed every person who had taken out a loan should repay it.

Get the new RNZ app

for ad-free news and current affairs