Press Release – New Zealand Government
The latest student loan statistics show that the gap between the repayment rates of New Zealand-based borrowers and overseas-based borrowers continues to grow, despite overall lifts in the number of people paying off their loans.Hon Steven Joyce
Minister of Tertiary Education, Skills & Employment
Hon Peter Dunne
Minister of Revenue
9 May 2013
Overseas-based borrowers paying, but not enough
The latest student loan statistics show that the gap between the repayment rates of New Zealand-based borrowers and overseas-based borrowers continues to grow, despite overall lifts in the number of people paying off their loans.
Overseas-based borrowers make up 60 per cent of the 84,562 borrowers in default as at March 31 this year, despite comprising only 15 per cent of the borrowing population. They are responsible for 82 per cent of the $520 million currently in default.
“More overseas-based student loan borrowers are paying more off their student loans as a result of the Government’s compliance initiative, but we need a major behavioural change if we are to see the pay-back rate even begin to match what we currently receive from domestic borrowers,” Tertiary Education, Skills and Employment Minister Steven Joyce says.
“It is simply not fair for those overseas to get a far easier ride than people who stay in New Zealand, contribute here, and pay off their loan responsibly.
“Our initiatives to date to encourage overseas-based borrowers to repay their student loans have collected $64 million since October 2010,” says Revenue Minister Peter Dunne.
“Overall we have collected $812 million from all borrowers (overseas-based and domestic) up until March 2013, which is up over $263.4 million on the same period last year. However some of that is undoubtedly a one-off as a result of people paying more before the end of the repayment bonus programme at the end of March.
“While the default amount owed by New Zealand based borrowers has decreased by 5.9 per cent in the last year, the default amount of overseas based borrowers continues to increase – since March 2012, it has risen by 34.3 per cent.
“While that’s partially the result of shortening the repayment holiday for overseas borrowers, the evidence we had was that the long holiday just masked the overall low level of compliance,” he says.
The outstanding student loan balance is currently $13.5 billion.
The Government has been considering further initiatives for overseas-based borrowers and will make announcements regarding the selected initiatives shortly.
“We are determined to lift the rate of overseas-based borrowers repayments to ensure people are meeting their commitments to New Zealand taxpayers, just like the New Zealand-based borrowers are doing,” says Mr Joyce.
“The initiatives that we have been considering will further encourage overseas-based borrowers to get in touch with Inland Revenue and get on top of their loans. The message for borrowers living overseas is to not leave it too late and that while they may go away, their loan will not,” Mr Dunne says.