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  • Arrested over a student loan. Is the government playing fair?

    There was a much publicised case earlier this year in which a man was arrested over outstanding student loan repayments. Some have cried ‘not fair’, but the point is, fair on who?

    The person concerned had lived outside NZ for more than 15 years. Returning to NZ they found their original debt had tripled and was still accumulating interest. On attempting to leave the country they were arrested at the airport and only allowed to depart after making payment against the debt.

    As with all aspects of the NZ tax system, student loan repayment is based on truthful self-assessment. Surely, having benefitted from a tax-payer funded loan, students have both a legal and moral obligation to fulfil their side of the deal?

    Most recent students leaving NZ for an extended period of time are well aware that they must advise IRD and abide by the rules around making debt repayments while overseas.

    However, as highlighted by the case earlier this year, collaboration between IRD and the Immigration Department means that the hundreds of students who left 15-20 years ago might be in for a rude shock when they come back.

    Many simply vowed never to return, making the obvious assumption that this also meant they would never have to repay their debt. But as time marches on more and more will be drawn home, often for some significant family event or simply to return to a more relaxed Kiwi lifestyle. On doing so they’ll find that their earlier decision has had significantly larger ramifications than expected.

    With new technology and government departments sharing information we can expect to see more actions of this nature in future.

    Now, more than ever, the onus is on students to stay informed of, and compliant with, the regulations. The information is readily available so ignorance is not an excuse – indeed it hasn’t been accepted as a defence by the IRD or the courts for over 30 years.

    The rules are simple really:

    If you’re not sure of your obligations the IRD will be only too pleased to assist you.

    If you have concerns, talk to the IRD or contact me for an obligation-free chat.

    Lance Ewens, phone: (07) 573 8446, or email: lance@bennettsproactive.co.nz