The Government has introduced their latest Student Loan Scheme Amendment Bill to put in place the reforms to student loans that they announced earlier this year as a part of the Budget.
Changes covered in the bill focus on issues to do with overseas borrowers and, in the Government’s words, ‘increasing personal responsibility for debt repayment’.
One of the more publicised policies included in this bill is giving the IRD the power to request an arrest warrant for borrowers living overseas who ‘persistently default’ on their student loan repayments. To enable this, the bill also makes it a criminal offence for overseas borrowers to knowingly fail or refuse to make efforts to pay back their loan.
The Tertiary Education Union describe this policy as “a poor alternative to making education more affordable and accessible” – I agree. This policy is a punitive measure that could stop these borrowers from coming back to New Zealand for fear of arrest.
The other big change included in this bill is introducing higher repayment requirements for borrowers who are living overseas. At the time of the announcement, I blogged about this policy and described the impact this would have for the daily lives of borrowers living overseas.
The bill amends the repayment rules for overseas-based borrowers by introducing a fixed repayment obligation and two new repayment thresholds. The Government sees the positives in this, as it will reduce repayment times and lower the interest cost for these borrowers.
Except, these new rules do not take into account the income of the borrowers. Student loan borrowers repaying their loans are graduates with complex responsibilities and situations. Unilaterally raising their repayments, without consideration for how much they are earning or what their situation is, will have very real and serious implications for their daily lives.
We will be opposing this bill when it comes before the House.