“For those who are overseas and are not repaying the student loan that New Zealand taxpayers funded, we think that’s not fair,” Willis said.
“This policy is about saying to those people, you actually got your heavily subsidised tertiary education in New Zealand, you have chosen not to contribute your skills to our economy and our community – we expect you to pay us back. If you don’t, there will be penalities – there will be consequences.”
If re-elected, the party would also restrict access to KiwiSaver so those living overseas permanently can only access their fund once clearing their student loan debt, while removing the need to prove a borrower had knowingly refused to pay before issuing an arrest warrant.
“National’s Back Pocket Boost for Graduates will reward young graduates who choose to stay in New Zealand, while pursuing those who leave and default,” Willis said.
“That is how we keep talent here, as part of our wider plan to fix the basics and build the future.”
National’s finance spokeswoman Nicola Willis says the plan aims to keep talent in New Zealand. Photo / Mark Mitchell
New Zealand’s Student Loan Scheme (SLS) was introduced in 1992 by the Jim Bolger-led National Government, replacing a long-standing system of near-free tertiary education.
Loans were initially interest-bearing for all borrowers until 2005, when Labour successfully tipped the election scales by campaigning to make student loans interest-free for those who remain in New Zealand for at least six months of the year.
In 2014, as offshore debt continued to balloon, National introduced “last resort” powers that made it easier for overseas-based defaulters to be arrested at the border.
The measure is still enforced, with arrests reported as recently as May, when a doctor living in Australia was arrested at Wellington Airport before flying home after defaulting on a decades-old student loan that had ballooned to about $180,000.
Data from Inland Revenue show that more than 75% of the 114,347 Kiwis living abroad are behind on their repayments, owing $2.3 billion in overdue debt.
Nearly half of that default – approximately $1b – consists of accumulated interest and penalties.
Willis said the Government would invest more in Inland Revenue to hire more debt collection agencies in the UK and Australia.
“If people return to New Zealand for a short period to visit friends or family, that they can be chased at the border by our police because they owe money to New Zealanders.
“Our message is a really simple one – if you owe money to New Zealand taxpayers, we expect it to be paid back. We are going to be going a lot harder on ensuring we are resourcing our enforcement agencies to get that money back from you.”
In last year’s Budget, the Government confirmed an indefinite freeze on the repayment threshold at $24,128, effectively forcing 370,000 borrowers to pay more as inflation rises.
By not adjusting for inflation, the move is expected to save the Crown $65 million over four years by capturing more of borrowers’ income.
Earlier this year, the Government granted Inland Revenue the discretion to provide interest relief for overseas borrowers on a case-by-case basis, provided they commit to a lump-sum repayment or a short-term agreement.
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