The new legislation includes tougher measures to deal with student loan borrowers who persistently refuse to make repayments and introduces higher repayment obligations for overseas-based borrowers to assist them to pay off their loans sooner.
“The integrity of the student loan system is very important. New Zealand tax payers provide very high levels of student support by world standards,” Tertiary Education, Skills and Employment Minister Steven Joyce says.
“It is important that student loan borrowers meet their obligations to the people who have supported their tertiary study, wherever they are in the world, so we can provide the same support for the next generation of students.”
Overseas-based borrowers are responsible for 80 per cent of all overdue loan repayments.
“The reality is that a minority of borrowers, who are mainly overseas-based, do not accept the responsibility to repay their loan, despite having the financial ability to do so,” Revenue Minister Todd McClay says.
“The new rules will give Inland Revenue the ability to seek an arrest warrant to deal with the most serious cases when all other efforts to persuade the borrower to make repayments have failed.”
Overseas-based borrowers with loan balances over $45,000 will also have their repayment rates increased. This brings them into line with the repayment obligations for New Zealand-based borrowers.
“The new obligations will speed up the repayment rate for these borrowers, reduce the amount of interest they will have to pay and ensure that more borrowers make sufficient repayments that at least cover the interest on their student loan,” Mr McClay says.
The new rules will apply from 1 April this year for the 2014–15 tax year.