Overseas student loans collection hits $150mTertiary Education, Skills and Employment Revenue
The Government initiative aimed at encouraging overseas student loan debtors to start repaying their loans has now netted $150 million in additional payments, and the pace of collection is picking up.
Tertiary Education, Skills and Employment Minister Steven Joyce and Revenue Minister Todd McClay say the initiative took three years to collect its first $100 million, and just six months to collect the next fifty million. It now has a year-to-date return of $16 for every $1 invested in it.
The overseas-based borrowers’ initiative was set up at the end of 2010, and it targets people in default of their repayment obligations in Australia and the United Kingdom, plus parts of Europe, North America and Asia.
A toll-free number has been set up by Inland Revenue for borrowers living in the United Kingdom and Australia.
Mr Joyce says incoming calls are averaging 224 per day – a 40 per cent increase.
“People are realising that under the new regime, just because they have left New Zealand, they haven’t left the debt behind,” Mr Joyce says.
“The New Zealand tax payer helped these students with their education. We want that debt repaid so we have a sustainable scheme that can support the next generation of students.”
Mr McClay says detention at the border remains a last resort, and he is encouraged that borrowers are responding to the measures put in place to make the loans easier to pay back.
“Overseas-based borrowers can choose from four online money transfer companies offering fee-free services, and when they use their credit or debit card, Inland Revenue will waive the convenience fee,” Mr McClay says.
“And we are being proactive in tracking defaulters down. Inland Revenue is directly contacting borrowers, advertising, and working with private debt collection companies.
“In the worst instances, we have taken legal action against those who simply refuse to pay – even if they can.”
Inland Revenue has had five successful judgments in Australia since the initiative began.
While the scheme has made good progress so far, there is still a total of $686 million in overdue debt owed by overseas-based debtors.
"There is a mountain of offshore debt that has built up over twenty years of governments ignoring the problem,” Mr Joyce says. “We will continue to scale up this initiative so we can really start making a dent in the overdue amount.”