Holly Walker

Crackdown on overseas borrowers – a real life example

by Holly Walker

Tertiary Education Minister Steven Joyce has been busy tweeting about how great the new crackdown on overseas borrowers contained in the Budget will be:

“Student loan borrowers based overseas = 15% of borrowers, 60% of defaulters & 80% of default amount. Time to pay more”

he tweeted yesterday.

This official spin results in stories like this: “Budget 2013: Tardy student borrowers owe $427 million.”

The Government’s tough new student loan rules are an attempt to claw back more than $427 million of debt in default from overseas-based borrowers.

New figures from the Inland Revenue Department show that borrowers based overseas make up 15 per cent of those with student loans, but account for 60 per cent of 84,562 defaulting borrowers. The top 20 defaulters living in Australia collectively owe more than $1.6 million in default, with each borrower owing more than $47,000 in arrears.

Changes announced in the Budget will see passport information matched with information on student-loan debt, meaning that defaulters could be arrested as they try to leave the country.

Fixed repayment obligations and higher repayment thresholds will also be introduced from next year.

Minister of Tertiary Education Skills and Employment Steven Joyce said the crackdown was aimed at the worst offenders.

That’s all very well, but the changes aren’t only about cracking down at the border. They also include higher repayment requirements for borrowers living overseas, regardless of their income or circumstances.

One of my pet bug-bears about the annual “crackdown” on student loan repayments that we’ve been experiencing for the past five years since National has been in Government is the implication that it’s lazy students that are being targeted. Student loan borrowers who are eligible to repay their loans are graduates – grown ups! – with complex responsibilities and situations. Unilaterally raising their repayments, like Steven Joyce did for domestic borrowers last year, and overseas borrowers this year, has real, serious implications for their daily lives.

Take this example, emailed to our team yesterday, from a kiwi family living overseas who want to remain anonymous:

“Husband has a postdoctoral fellowship worth US $41,364. Wife is in the examination process for NZ PhD and is otherwise currently unemployed. We have one toddler, and a second baby on the way. Combined, our minimum compulsory repayment threshold has just been increased from NZ$6000 to NZ$9000 pa, with, as far as we can tell, no means testing or anything that takes into account our income or have dependents, only the fact that we’re now living overseas. At the current exchange rate this roughly calculates to 18.6% of our current household income. (On top of this we’re also paying the interest on our loans, and our normal outgoings which include expensive USA health insurance.) Husband chose to leave NZ to do a post-doctoral job because that is how he will establish international collaborations to further his research career, and also he had very little prospects of getting a similar job in NZ. We want to pay off our student loans and return to NZ, and fully intended, but not in a way that will stretch us so financially when we have children so young.”

It’s people like this who will be most affected by these unnecessarily punitive changes, not the archetypal lazy students deliberately evading their responsibilities imagined by Minister Joyce. It’s time some of the reporting about these changes reflected this.

Published in Economy, Work, & Welfare | Education by Holly Walker on Sat, May 18th, 2013   

Tags: , , , ,

More posts by | more about Holly Walker