May 8, 2021

Maori News & Indigenous Views

Student loan ‘holiday’ slashed to one year

1 min read

(AAP) Student loan holders heading overseas will have to start repaying their loan after just one year following a law change.

Borrowers were previously allowed to spend up to three years overseas before they had to make loan repayments.

They will now have to apply for the one-year repayment holiday before leaving New Zealand, and provide a New Zealand-based contact person for Inland Revenue to help track them down overseas.

From January, Inland Revenue will be able to obtain those details from Studylink.

Payments will be calculated for all borrowers each pay period, and those who under-pay will have catch-up deductions made from their pay, under the new law.

The enacting bill passed by 72 votes to 45 on Tuesday night, with Labour, the Green Party and Mana opposed.

Most of the changes came into effect on April 1, and last-minute clauses were added on Tuesday to ensure the law would apply retrospectively.

The 91,000 student loan borrowers living overseas owe about $2.5 billion, with total student loan debt at more than $12 billion.

Last year, Revenue Minister Peter Dunne said Inland Revenue had contact details for only about a quarter of student loan borrowers abroad.

The government’s crackdown on student loans has previously warned overseas borrowers they could face court action, while the government has also investigated using overseas debt collectors to recover loans.

Should students living overseas have to pay back their loans? Have your say below

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