A further 50,000 people who live overseas and owe money on their student loans are going to be targeted by the Government.
The total student loan debt is about $10 billion of which about $2 billion is owed by people living overseas.
Tertiary Education Minister Steven Joyce says a pilot programme run by the Inland Revenue Department has been successful.
Mr Joyce says it targeted 1000 holders in Australia and has netted more $4.7 million in debt repayments.
The programme will be extended to cover not only people in Australia, but also Britain.
Student loan debtors will be contacted directly about either paying the arrears, or setting regular payments.
Mr Joyce says legal action is a last resort, but will be used against those who deliberately choose not to repay their loan.
Meanwhile, Inland Revenue is beginning tough legal action against 24 student loan borrowers living in Australia, saying it will take them to court over non-repayment.
Richard Owen from the department says 21 borrowers in the pilot responded to final demand letters, but another 24 have paid only a small amount, or nothing, towards their loan.