The Student Loan Scheme Amendment Bill (No 3), which changes repayment obligations for overseas-based borrowers and
tougher measures for persistent non-payers, passed its second reading in Parliament today.
“This legislation continues the Government’s focus on providing fairness to the taxpayer through proper oversight of the
student loan scheme,” Revenue Minister Todd McClay says.
“Many overseas-based borrowers are continuing to let the side down with slow repayments and high levels of loan
defaults, compared to those who stay in New Zealand and pay off their loans,” Tertiary Education, Skills and Employment
Minister Steven Joyce says.
“We have been successful in reducing the cost of the student loan scheme to taxpayers, with the cost of borrowing
reducing from around 48 cents in the dollar in 2009 to an estimated 39 cents in the dollar as at 31 March 2013.
“However this still remains higher than we would like. The Government is working to further improve the compliance of
overseas-based borrowers by both tightening lending criteria and increasing the speed of repayments.”
The legislation will give IRD additional tools, including seeking an arrest warrant, to deal with overseas-based
borrowers who persistently refuse to repay their loans despite having the ability to do so.
“This action will be taken only in the most serious cases of non-compliance and only after Inland Revenue has exhausted
all other efforts to persuade the borrower to make repayments,” Mr McClay says.
The bill also proposes to bring overseas-based borrowers’ repayment obligations more into line with their New
Zealand-based counterparts by proposing a fixed repayment obligation and increasing the repayment rates for borrowers
with loan balances over $45,000.
“A fixed repayment obligation will assist overseas borrowers to pay off their student loan faster and therefore reduce
the amount of interest they will have to pay,” Mr McClay says.
ENDS