Overseas student loan debt out of sight and out of mind

Overdue student loan debt increased by a third over the last year because of overseas student loan borrowers.

The Inland Revenue Department (IRD) annual report shows that the total of overdue student loan debt has increased from $207 million last year to $306 million this year.

This has meant that many overseas-based borrowers who previously did not receive an annual assessment are now being assessed.

The customs data match enables the IRD to identify borrowers who have left New Zealand, by matching personal details against customs' arrival and departure information.

As a result of this there has been a large increase of 110% in overseas-based borrowers' overdue repayments compared with the same time last year.

Of all the student loan borrowers with loan arrears, 30% (34,100) are overseas-based.

Sophia Blair co-president of the New Zealand Union of Students Association says this is not surprising because many people head overseas to get better paying jobs.

She says it is very hard to pay off a student loan overseas because you can't check your account balance or see how you are paying it off with the IRD online - you have to ring New Zealand to do that.

Blair says as a result the student loan is out of sight and out of mind for those overseas.

Adding to the loan is interest, which starts being charged when you've been overseas for six months.

"People don't want to have to jump through hoops to repay their loans," she says.

However an update of the IRD's student loan system should start to help the concerning trend of overdue debt rising.

It was announced in June that the government has approved implementation funding to enable IRD to purchase a dedicated loan management solution to administer student loans.

This will enable the IRD to provide enhanced online services, increasing borrowers' ability, particularly overseas-based borrowers, to self-manage their loan account.

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