Threats working for student loan repayment

Joyce said Inland Revenue can issue an arrest warrant for people who persistently default on repayments. Photo / Getty

The threat of a tap on the shoulder from Customs has led to more overseas Kiwis paying back their student loan, the Government says - including one who wrote a cheque for close to $100,000.

Tertiary Education, Skills and Employment Minister Steven Joyce said the target of collecting $100 million in a single year through the overseas-borrowing initiative would likely be met next year.

He said many times that amount was still owed by New Zealanders living overseas.

"We have already had examples of people coming and writing cheques for tens of thousands - in one case I think nearly over $100,000 - in order to not feel worried at the airport about whether they might have a chat with the Customs people.

"My message to people who are in Australia who think they may have avoided their student loan by just keeping their heads down, is that it would be a really good idea to get in touch with IRD and start making some arrangements to pay off their student loan."

In the most serious cases, Inland Revenue can issue an arrest warrant for people who persistently default on repayments.

In July, IRD was monitoring 20 people who could have this action taken against them. In past cases, the borrower targeted has made repayments before a warrant is issued.

Mr Joyce, speaking to reporters overnight in Vietnam, said other methods had been to bring in debt collectors offshore, and allowing the IRD to pursue people through the courts in Australia and the United Kingdom.

In the past year, 20 new cases of Australian-based borrowers were referred for legal enforcement.

The New Zealand Union of Students' Associations has criticised the Government for compelling students to repay their loans through a policy of fear rather than supporting them with a more intuitive repayment scheme, saying it could drive graduates away.