Expat Student Loan Evaders Face Imprisonment under New Bill

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Expat Student Loan Evaders Face Imprisonment under New Bill

Following its announcement as part of the budget in May, the Student Loan Scheme Amendment Bill has now been introduced to New Zealand’s Parliament.

If this controversial proposal is passed it could mean that any Kiwi expats who fail to meet their student loan repayments could be arrested at the border if they return to New Zealand.

According to Revenue Minister Todd McClay, the changes outlined by the new law will ensure that any Kiwis who take out a student loan and then move overseas will pay back what they owe.

With expat borrowers accountable for 4/5ths of all overdue loan repayments, the fact that the Inland Revenue Department would be granted the power to request arrest warrants should make a big difference.

Those who continually resist repaying what they owe could be arrested at the border and face charges. As McClay states: ‘The arrest power was intended to be used only for the most serious cases of non-compliance.’

McClay also remarked; ‘In most cases these borrowers start to comply with their obligations once they are contacted by the Inland Revenue, but a small minority continue to refuse to take responsibility, despite having the ability to do so.’

As it stands, the repayment obligations of expat borrowers is calculated based on their loan balance, while New Zealand-based borrowers make income-dependent repayments. This disparity will be addressed by the bill with the proposal that fixed repayment obligations will be introduced for overseas borrowers.

In reference to this McClay added ‘These changes will reduce significantly the repayment time and the amount of interest borrowers must pay on their loans, and ensure that more borrowers make sufficient repayments that at least cover the interest on their student loan.’

Recent figures have shown that overseas-based borrowers were responsible for roughly 535 million New Zealand Dollars worth of overdue loan repayments as of the end of June 2013.

The adaptations outlined will come into effect from the 1st April 2014.

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