Third arrest in New Zealand in overseas loan debt crackdown

Arrest comes as government targets up to 10,000 borrowers living in Australia

November 1, 2016

New Zealand’s hardline policy on student loan debt has seen a third person arrested at the border, while the government targets up to 10,000 borrowers living in Australia.

The man, who was not named, was arrested and forced to start making student loan repayments before being allowed to leave for Australia, The New Zealand Herald reported.

Earlier this year, a report published by the Higher Education Policy Institute said that the UK could learn from New Zealand’s tough approach to overseas borrowers.

The latest arrest came as the New Zealand government began a new stage in its efforts to track down borrowers living in Australia.

After the start of an information exchange agreement between the Australian and New Zealand tax offices, Steven Joyce, the tertiary education minister, said that 10,000 borrowers in Australia had been identified and they could expect “a knock on the door” if they did not take action to pay off loans.

The government will be checking to see how many of the borrowers living in Australia are in default, but the minister said that he expected “most” would be.

Six warrants for arrest have been issued this year and three people have been arrested at the border.

The total amount of New Zealand student loan borrowing in default is now NZ$1.07 billion (£588 million), of which 90 per cent is owed by people living overseas, the Herald said.

In 2014, legislation made it a criminal offence for overseas borrowers in default to refuse to repay, and allows arrest warrants to be issued for persistent defaulters.

Nick Hillman, Hepi director, said when its report on New Zealand was published in July: “Tax evasion and benefit fraud rip taxpayers off. Defaulting on your student loan could be regarded as just as bad.

“Yet it is fairly common among both Brits and European Union citizens who study in the UK before working abroad. Whitehall has never gripped this problem fully but New Zealand’s experience suggests strong enforcement action works.”

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