30 Jul 2015

IRD considers student loan default arrests

4:54 pm on 30 July 2015

Inland Revenue is currently monitoring and considering the arrest of 20 overseas student loan borrowers who continue to default on their repayments.

It estimates there are almost 110,000 borrowers overseas who collectively owe about $3.1 billion.

Inland Revenue (IRD) can issue a warrant for the arrest of those who persistently default on their loan repayments.

In the past year, 20 Australia-based borrowers were referred for legal enforcement. Three have now repaid what they owed.

The Minister of Tertiary Education, Skills and Employment, Steven Joyce, said since the campaign to encourage overseas student loan repayments began in 2010, more than $200 million has been repaid.

He said for many it was the threat of arrest that forced their hand.

"Arrest at the border is of course the biggest sanction, and obviously the one that we want to use the least.

"There are a lot of people who will take IRD up to that point and then make a payment just prior to being subject to arrest at the border.

"And obviously nobody wants to be pinged in that way so it has been a very useful deterrent and has resulted in us collecting quite a lot of money, with people writing out cheques to avoid that."