About 70 per cent of overseas-based student loan borrowers are in default, and about 60 per cent are thought to be in Australia.

New laws making it easier for the IRD to track Kiwi student loan defaulters living in Australia could help claw back as much as $100 million extra a year.

About 70 per cent of overseas-based borrowers are in default, and about 60 per cent are thought to be in Australia.

Thousands of them now face Australian debt collectors, courts or arrest at the border after a data-sharing swap with the Australian Tax Office gives the IRD access to the contact details of any defaulters who have paid tax in Australia.

DAVID WHITE/ FAIRFAX NZ Kassie Brosnahan, who still has to pay off about $8000 of her loan, was not convinced pursuing defaulters was right. "I would feel a little bit uncomfortable about the breach of privacy."

Until the latest measures were passed into law earlier this week, it was considered too hard for the IRD to track down defaulters living overseas.

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"This is just going to provide a far larger group of people who have gone to ground," Tertiary Education Minister Steven Joyce said on Friday.

DAVID WHITE/ FAIRFAX NZ Dylan Taylor recently paid off a $15,000 loan, but said the idea of pursuing debtors to Australia seemed "quite punitive".

"It's important for the sustainability of the [student loan] scheme, and to make sure it's fair."

By being able to cast its net wider, IRD would be able to start initial discussions with more defaulters and, if people still aggressively ignored IRD, they could face Australian debt collectors and courts, or arrest if they returned to New Zealand.

The latest measures comes just months after the first arrest of a student loan defaulter, when Ngatokotoru Puna was collared at Auckland Airport in January when he tried to leave.

The 40-year-old nephew of Cook Islands Prime Minister Henry Puna had avoided paying back his loan for 20 years and had racked up $130,000 in student debt after moving to Rarotonga.

Student loan debts remain interest-free while borrowers are in New Zealand. When they leave for more than six months, their loans accrue interest from the day they leave, which can then be compounded by penalty rates if they do not pay.

'I WON'T PAY'

An expat Kiwi defaulter living in Australia, who borrowed $15,000 in the mid-1990s, said penalty interest rates had inflated his loan to about $80,000.

IRD already had his details, but he had told them he had no intention of paying, he said.

"I'm in good company, though. There's at least of 60,000 of us – at two arrests a year it will take 30,000 years to get everyone. It doesn't seem like a well thought-out plan ... f...ing muppets."

He said he would return to New Zealand for occasions such as funerals, but "as for holidays, forget about it".

Last time he was here, he said he spent thousands of dollars on tourism, and he suspected a crackdown on defaulters would cost the tourism industry.

"They are probably losing more money through lost tourism than what they are allegedly recouping in loans."

He described the student loan scheme, introduced in the early 1990s as "predatory lending" and the IRD as "loan sharks". "For me it's political, I'm simply not paying a 20-year-old debt."

Dylan Taylor, who recently paid off a $15,000 loan, said the idea of pursuing debtors to Australia seemed "quite punitive".

"It does make me feel a bit uneasy ... in the sense that most people would only be leaving New Zealand because they don't have many opportunities in New Zealand."

Kassie Brosnahan, who still has to pay off about $8000 of her loan, said there was an expectation that people who got loans repaid them.

But having the taxman pursuing debtors across the ditch left her feeling uneasy. "I would feel a little bit uncomfortable about the breach of privacy."

The IRD said only that it expected the data-swap agreement to increase repayments.

Labour education spokesman Chris Hipkins said data-sharing was good if it helped borrowers overseas avoid getting into default by accident.



"But the huge mountain of student debt is something we need to rethink. At $15 billion and still growing, it is clearly getting out of hand."

Young people saddled with huge debt were putting off having children and struggling to buy a home. "A whole generation of Kiwis is getting a pretty rough deal compared to those that came before."

BY THE NUMBERS

* $3.25 billion owed by about 110,000 Kiwis with student loans living overseas. Nearly $1b of that is in default

* 720,000 people have loans, with an overall debt burden of $15b

* 91 per cent of overdue debt is owed by people living overseas, mostly in Australia

* Government wants to recoup an extra $100m a year from borrowers

* Student debt is growing at its slowest rate in a decade. Last year it grew 4.2 per cent; in 2005-06 it grew 11.6 per cent

REPAYMENTS: THE RULES

* Borrowers who leave New Zealand for more than six months accrue interest from the day they leave, which can then by compounded by penalty interest if they do not pay

* Borrowers living overseas and returning to New Zealand can be prevented from leaving again if they are significantly behind in repayments

* If a borrower goes bankrupt, the loan is included in the bankruptcy



