Student debtor bitter at paying $35k when loan drops just $11k
An Ohakune woman who paid $35,000 towards her student debt, only to have the balance drop by just $11,000, says there should be more leniency for borrowers who go overseas.
Kelly Righton said she went to study at 17 with no clear idea of what career path she would take.
After two years working towards an art diploma and another three years on an IT degree, she graduated with a $50,465 student loan.
‘‘Turns out, my eyes were supersensitive to staring at computer screens all day long and I would get strain headaches. My weight also started to fluctuate as I was sitting down all day and into the night most nights to finish projects.
‘‘Completing my degree meant that I was now supposed to find work in my chosen industry. I had top grades and after working for a few months, I decided to take a sixmonth OE. I was still feeling very unhealthy and not enjoying sitting at a computer all day long. Upon returning to New Zealand refreshed, I knew I couldn’t do years of work in front of a computer anymore. Eventually, I packed up everything and made the big move overseas.’’
She followed a dream to work on superyachts and found employment in Spain and the Caribbean. At the time, there were not those work opportunities available in New Zealand, she said.
Over eight years, she made all the payments to her loan she was required to. Because of the balance, that was $4000 a year.
But because she was overseas for more than six months, the loan started to incur interest.
‘‘Do you know how much I had paid and still owe? Over eight years I had repaid $35,000 and my loan is still sitting at $39,000. A total of $11,000 out of the $35,000 I had repaid was wiped from my loan.
‘‘I find the huge interest charged against me for doing the right thing and making the overseas repayments on time is absolutely saddening and heartbreaking. I wouldn’t be able to put down more than the required repayments either as they are $4000 per year on a $50,000 loan and on a small salary of approximately $35,000 per year, that would not be possible. But hey, I am happier and healthier than I ever have been and I do not regret moving overseas to live a better dream one little bit.’’
Her statement shows she has been charged $40,424.77 in interest.
The current interest rate for overseas student loan borrowers is 4 per cent, but it changes each year. Late payments are charged at a rate of 8 per cent. How much borrowers are required to pay back depends on the size of the loan and ranges from $1000 a year to $5000. People with debt of more than $90,000 are warned their payments may not cover the interest owing.
Righton is back in New Zealand for now because of a medical issue but hopes to return overseas. She said it was stressful to think of the debt she was carrying.
Data shows that at the end of October, there were 109,400 overseas-based student loan borrowers who owed the Government a combined total of $3.4 billion, including $539.6 million in penalties and $1.335b in interest.
Overseas borrowers are responsible for 91 per cent of the overdue student debt.
Righton said people should be rewarded for making payments, perhaps with a lower interest rate. ‘‘My salary is not huge but I managed to put aside the money to pay it.’’
She said reports of debtors being stopped at the border made her afraid to fall behind.
Legislation introduced in 2014 gave Inland Revenue the authority to apply for arrest warrants for student loan defaulters leaving the country.
‘‘I find the huge interest charged against me for doing the right thing and making the overseas repayments on time is absolutely saddening and heartbreaking.’’ Kelly Righton