


Acting president Laura Harris said the arrest of a man over the debt was worrying, adding that she had been contacted by a large number of concerned students and parents.

The defaulter, who had ignored requests to repay his student loan which was now around $130,000 was arrested at the border on Monday while trying to leave the country. He had lived overseas since 2004.


After an initial court appearance, he was bailed to his in-laws' house, and he is due back in court today.



"The way that you repay the schemes is based on your student loan and not your income. The system should encourage them to pay loans instead of really harsh penalties."

Ms Harris also said the arrest sends a chilling message.

"We are concerned that this will turn those who are overseas with student loans into permanent refugees, and do little to encourage further compliance with the student loan scheme."

She said there were 130,000 Kiwis overseas with student loans and IRD has previously reported that 70 per cent of them are considered behind in their payments.

"There are clearly issues with the scheme if an overwhelming majority of the participants are non-compliant and the Government needs to look at this before enforcing this draconian measure," she said.


"The right to freedom of movement and to a passport is a fundamental one enshrined in the International Covenant on Human Rights, and should not be broken over a debt - especially given New Zealand effectively abolished imprisonment for debt over 100 years ago."

She said calls had come thick and fast today, with concerns raised from borrowers overseas and their New Zealand-based parents.

"[The arrest] does nothing for either of those concerns. Instead it sends a chilling message that student loan borrowers are cannon-fodder as the Government plays at populist politics."

An IRD spokeswoman said the agency could not respond to specific questions about the case due to privacy laws.

Tertiary Education Minister Steven Joyce said he was also unable to respond to specific questions about the case as it was before the courts.

When asked if the arrest was considered a success for the Government's student loan recovery initiatives, he said:

"Our preference is that people just meet their obligations and that's the important thing because you can't forget that these people have had the benefit of loans from the tax payers to be educated.

"They have made a commitment to pay the money and in some cases, not all cases, they have gone offshore and chosen to forget this."

Arrest was the "last resort", he said.

"If people refuse to do anything there has to be some consequences."

Mr Joyce said there were hardship allowances for people unable to make repayments, but they needed to make contact with IRD to organise such arrangements.


Inland Revenue has tracked a small number of overseas-based defaulters but, despite the controversial policy generating headlines, until now no arrest warrant has been issued.





The option of arrest at the border was modelled on a law that is used to capture people who default on child-support payments. It was designed to target the worst offenders and act as a deterrent to others.



An information-sharing agreement with Australia, expected to start this year, will allow for the exchange of contact details of Kiwi borrowers living in Australia.

Debt repaid by proportion of borrowers who left study in 2002 (%)

Repayment threshold changes took effect after 2012, hence this data series was discontinued.