Student loan debt now at ‘crisis level’

The burden of unpaid student loan debt has reached ‘‘crisis level’’, and other options need to be explored outside of arresting people at the border, the Young Greens say.

The comments came in response to a woman’s arrest at Auckland International Airport over her loan last Friday.

It was the first arrest over student loan debt in 2020 and the ninth in total since a law change gave Inland Revenue the power to arrest in 2014. Inland Revenue said it could not confirm any other details because of secrecy obligations under the

Tax Administration Act.

Duty Minister Phil Twyford said on Thursday an arrest at the border was an ‘‘absolute last resort’’ but the Government was not currently considering changes to the policy. ‘‘Our priority is to make education more affordable.’’

But the Young Greens said the repayment threshold needed to be adjusted to start at a higher income to reflect borrowers’ ability to repay.

Currently, borrowers must make loan repayments if they earn more than $19,760 a year before tax.

‘‘We need to explore options to introduce a debt write-off scheme that limits the individual burden of debt,’’ Young Green co-convenor Danielle Marks said.

Holidays from repayments for overseas borrowers needed to be lengthened, she said.

Currently, borrowers can apply for a repayment holiday for up to 12 months.

Lawyer Graeme Edgeler said Inland Revenue would do a lot of work on a student loan case before getting to the point of an arrest.

That was shown by the low number of arrests in such cases – three in 2016, one in 2017, two in 2018 and two in 2019. Student loan default cases were civil matters and not criminal, he said.

The total value of all student loans was $16 billion at the end of 2018/2019, according to the Student Loan Scheme Annual Report 2019.