Legal action is about to begin against hundreds of New Zealand expats who have not made any effort to repay millions of dollars in outstanding student loans.
From today, authorities will start sending letters to Australia-based defaulters warning that legal action is being taken as a result of their ongoing refusal to pay up.
The letters will be the first step in what will eventually end in court proceedings - and a possible bad credit rating - if repayments are not made.
Tertiary Education Minister Steven Joyce told the Herald authorities would be targeting expats who are "seen to be deliberately flouting their opportunities to pay back" their loans.
People who have "significant sums of money" owing will also be targeted.
"It's about people meeting their responsibilities and that is what's really important, so we will be working on this pretty hard.
"People who are based overseas are taking on average 14 years to pay back their debts, and that affects the sustainability of the whole student loan system.
"It's just not fair on taxpayers and it's also not fair on borrowers who remain in New Zealand and pay their debts."
The campaign against defaulters in Australia began in October. At that time a total of $325 million was owed to IRD in overdue student loans - more than half of which was from people living overseas.
Just over $15 million was owed by 3500 expats in Australia - 1000 of who were targeted directly by letter and phone and indirectly by online marketing campaigns.
Since then $818,392 has been repaid by 243 borrowers who as the result of phone calls and direct letters.
A further $1.09 million has been repaid by 400 borrowers - who were not targeted in the campaign - as a result of separate online marketing.
Mr Joyce said the pilot campaign had been working well and had been extended to the United Kingdom, but it was now time to step things up.
He hoped the message would get through to the defaulters before more serious action was taken. "Ideally people will realise they have this legal commitment and it isn't going away."
However, for those who do not start making repayments the matter will be moved to court - an action that would be initiated from here, but probably be played out in an Australian court.
From there defaulters could be ordered to repay or face the consequences, which could include being given a bad credit rating or in a worst case scenario, bankruptcy.
At the moment defaulters only have to pay back outstanding debt, but Mr Joyce said a bill was currently going through the House which would for the first time allow IRD to recall the whole loan.
"If there are people who are just deliberately not paying and obviously have the ability to pay, then IRD will be able to apply to the court to have that whole loan recalled."
No escape for student loan expats
Are you living overseas with a student loan you have yet to repay? Will legal action be enough of a threat to make you start repaying it? email: elizabeth.binning@nzherald.co.nz
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