Merry Christmas from Inland Revenue: Returning Kiwis who defaulted on their loans could be arrested

Student loan borrowers may face a harsh arrival at the airport if they've defaulted on their loans. Photo / iStock

Kiwis abroad have been warned that they may be arrested when they come home for Christmas if they have defaulted on their student loan.

In a statement IRD said a group of Australian-based Kiwis were on the NZ Customs Service alert list, meaning Inland Revenue would be notified on their arrival in the country.

However, it said the arrest warrants were in place "for only the most serious offenders".

Inland Revenue Collections Manager Stuart Duff says those in serious default may not be able to leave New Zealand until they have a repayment scheme in place.

"Inland Revenue is urging Kiwis living overseas with unpaid student loan debt to get in contact with us to set up a repayment plan, particularly those thinking about heading home for Christmas."

He said it was time borrowers in default met their obligations.

Along with being able to arrest borrowers in default at the border, a new bill introduced in November allowed greater sharing of information between Inland Revenue and the Australian Tax Office.

This meant an increased number of Kiwis with unpaid student loans in Australia could be identified and gave officials in New Zealand access to up-to-date contact details.

IRD also planned to get in touch with those nominated as points of contact by borrowers while they are overseas.

It's part of the Government's strategy to hunt down student loan borrowers living overseas and get them to pay up.

Those with a student loan living overseas are required to make two repayments each year towards student loan debt, in the form of two lump sum payments or regular payments throughout the year.

The Student Loan Amendment Act 2014 set higher repayment thresholds for Kiwis with student loans living overseas to encourage loans to be paid off sooner. The law also has tougher measures to deal with borrowers who persistently refuse to make repayments.

Overseas-based borrowers are responsible for $840 million in overdue debt - the majority of whom live in New Zealand.