Expat Kiwi still paying loan doubled by interest
US-based techie says debt kept ballooning even though he kept up payments to IRD
Expat Kiwi high-tech marketer Ash Gorringe has always paid his student loan on time — yet it’s more than doubled to $109,000 because of the interest. Gorringe, 42, is now based in San Francisco but keeps close links with New Zealand and helped to start the Ma¯ori-language version of Google.
He left the country almost straight after graduating from the University of Auckland with a master’s degree in history and a $50,000 student loan in 2002, working in Australia, Britain and now the United States.
He has always paid the amounts requested by Inland Revenue, which are based on the size of the outstanding loan — $5000 a year for a loan above $60,000.
But his debt kept on growing until last year because the interest added each year was more than $5000.
A Herald investigation has found that many of the 108,840 New Zealanders now living overseas with outstanding student loans are afraid to come home since Inland Revenue was given power in 2014 to arrest overdue debtors when they crossed the New Zealand border.
But Gorringe said he felt he was being penalised even though his loan had never been overdue.
“As I reach a point in my life where the age of retirement will soon be closer than when I started my studies, I can’t imagine reaching 65 and still having to service this loan, at which point I would have been repaying it for 37 years,” he said.
“I think many of us in this situation feel that we don’t have any voice.
“A lot of us have remained in good standing with our repayments, continue to have strong ties to New Zealand, do not want to declare bankruptcy and wish to keep travelling to New Zealand on our NZ passports. But it sometimes feels like there is no light at the end of the tunnel.”
All student loan borrowers had interest added to their loans each year until April 2006.
Since then the loans have been interest-free for borrowers who stay in New Zealand, but interest is still charged for those living overseas — about one-seventh of the 708,518 people with outstanding loans.
The annual interest rate was 7 per cent until 2006, and has dropped gradually since then to 4.8 per cent in 2016-17, 4.4 per cent in 2017-18, 4.3 per cent in the year to last March and 4 per cent in the current tax year.
Even at 4.8 per cent, the interest on Gorringe’s loan, which was then $111,000, was $5328 — more than the $5000 he was paying off each year. It finally fell below $5000 last year.
“So I’m just starting to get my head above water with it,” he said. “To now get it back down is a very long slog.”
Gorringe got into marketing for high-tech companies through a parttime job with Spark’s internet service xtra while he was at university. That got him a job with Nine-MSN in Sydney and then Google and other tech companies in San Francisco.
He represented Google at the launch of Google’s te reo Ma¯ori platform in Rotorua during Ma¯ori Language Week in 2008.
“I worked alongside the people who were spearheading te reo to promote it within Google,” he said.
“We feel that we are still New Zealanders, and just because we made decisions, and in many cases our lives are now overseas for various reasons, that’s how the world works now.
“We have got families in New Zealand and we don’t want to have to travel on foreign passports, which is what people are doing now and they will enter New Zealand on a foreign passport so they can’t be stopped.”
He said he was “comfortably off”, but was renting his apartment.
“I live in one of the most expensive cities in the world,” he said.
“Of course it’s my choice, I get that. But as a result I only have so much disposable income to put towards this, and it’s kind of like, hey, am I still going to be paying this in my 70s and 80s?”
He noted that student loans in Britain were written off if they were outstanding 30 years after the first repayment was due.
Science trumps music
Liz Goodin missed out on the classic Kiwi “overseas experience” and gave away the subject she was most passionate about, music — but is now forging a career in a much more secure field, medical research.
She made the choice because she had to pay for her studies, ending up with a $67,000 student loan. But she has no regrets.
“The two subjects I really loved through high school were music and biology,” she says.
“I really wanted to go to Victoria University in Wellington and study either performance music in voice and clarinet or biomedical science, with the intention of following that
. . . through to a related career.
“Speaking to peers and family, it was suggested that getting a job in music may be more difficult. I also knew that my academic talents were perhaps a little stronger in biology than in music. So I chose biomed.
“I would say that I was perhaps a little more passionate about music, but biomed seemed ‘future-proof’.”
Goodin is now 28 and a research technician for the famous Dunedin Study of 1000 people born in 1972-73.
“I don’t regret choosing biomed, because it has led me to a great career now — in the sciences — which I enjoy and also pays enough to allow me to have bought my first home with my partner,” she says.
“I do regret not doing some music though, whether as a double degree or as a minor of some sort.
“At the time it seemed like it was wasting money to follow something that was purely for my personal development rather than being a pathway to financial gain. An extra $5000-$10,000 on top of the already growing loan was tricky to justify.”
In her first year at university she reckoned she was paying a few dollars for every minute of class time. Based on her $7000 first-year loan for fees and course costs, she now puts the cost at about $20 an hour.
She did a degree and postgraduate diploma at Victoria, then a master’s in genetics at Otago. All up, her student loan was $67,000.
She calculates she could have borrowed about $15,000 less if she had saved more in a two-year gap between the two universities, applied for scholarships, and used online resources instead of borrowing to buy textbooks.
But she believes she would have worked just as hard even if she had not had to pay anything.
“Time is a massive investment too and, despite popular opinion, I don’t think many young students, like I was, dedicate valuable years to study without the intention of performing well. The pressure to achieve is there, whether the debt is there or not.”
She has missed out on the classic
Kiwi “overseas experience” because she would have had to pay interest on her loan, but she has had two short trips overseas and is
“not too upset about not having done a big OE”.
She accepts that students should pay a share of tuition costs and feels the only issue is whether the students’ current share is appropriate.
“If money is a significant barrier to students entering tertiary education and a barrier to them performing well in it, then perhaps the balance needs to shift to a higher percentage of those fees coming from the Government,” she says.
“The calculation of the split should be based on data gathered from the students themselves — whether contemplating study, presently studying or having completed that education.”