Taxman finds $1.2b student debt in Aust

"It's time these people did the right thing and met the obligations they signed up to when they took out their student loan." Revenue Minister Michael Woodhouse

Nearly 57,000 Kiwi student loan borrowers living in Australia have been tracked down as part of a government crackdown, with two-thirds behind on their payments.

An information-sharing agreement between Inland Revenue and the Australian Tax Office, in effect since October, has identified Kiwis with a combined loan balance of $1.2 billion, with $430 million in default.

A total of 56,896 people have been located as part of a data match, after about 10,000 were found in the first round.

Revenue Minister Michael Woodhouse said more than half of the borrowers left New Zealand at least five years ago, with nearly a quarter away for more than 10 years.

A third had not been in touch with Inland Revenue, while 43 per cent had not made any payments since leaving the country.

‘‘It’s time these people did the right thing and met the obligations they signed up to when they took out their student loan,’’ Woodhouse said.

Tertiary Education, Skills and Employment Minister Steven Joyce said Inland Revenue would use the information to track down borrowers in default and ensure they paid what they owed.

The Government passed new laws earlier this year to make it easier to track down Kiwi student loan defaulters in Australia, with Inland Revenue estimating it could claw back as much as $100m more each year.

About 70 per cent of overseas-based borrowers are in default, with 60 per cent of those thought to be in Australia.

Ngatokotoru Puna, the 40-year-old nephew of Cook Islands Prime Minister Henry Puna, became the first student loan defaulter to be arrested when he was intercepted at Auckland Airport in January.

Puna had avoided paying back his loan for 20 years and racked up $130,000 in student debt after moving to Rarotonga. Two more defaulters have since been arrested.

Joyce said the information sharing deal with Australia was ‘‘a big step forward in terms of recovering that money’’, and defaulters living there could expect a knock on their doors in the coming months if they didn’t start paying off their debts.

‘‘I’ve counselled people in Australia that if they’re worried about their student loans, they should get in touch with the IRD - that would be preferable than waiting for the IRD to get in touch with them.’’

Student leaders have expressed fears about the Government’s crackdown and how it will affect those living overseas.

The New Zealand Union of Student Associations earlier this year said expat students had contacted them, worried about what could happen to them if they return home for funerals and family events.

Parents were also concerned they might not see their children again. - Fairfax NZ