Access to student loans tightening up

25/06/2014 by Nita Coetzee
The government continues to tighten up access to assistance for students as well as extending their reach for repayments.

Limits on access
If you have started or will start study after 1 January 2014, there is now a residency requirement of three years (previously two years) before you are eligible for a Student Loan which applies to those who are not New Zealand citizens, refugees, or protected persons. Age limits apply for Student Allowances. The amount of assistance people over 40 are eligible for is limited to 120 weeks and students aged 65 or over are no longer eligible for a Student Allowance for study starting after 1 January 2014.

Repayment obligations – don’t be late
If you defaulted on your student loan repayments while living overseas, but returned to New Zealand, the Inland Revenue can now request an arrest warrant if you are about to leave New Zealand. Inland Revenue and the Department of Internal Affairs now have an information sharing agreement allowing them to share contact details for overseas-based student loan defaulters when they renew or apply for their passport. Inland Revenue will be able to contact individuals to discuss their outstanding arrears. Click here to read more.

While on the same subject we came upon an article from Brent Gilchrist and it seems this is rather a hot topic at the moment “Parents should also be wary of ‘courtesy’ calls from IRD seeking confirmation that Mum or Dad is still willing to be the contact person for their overseas based student loan-owing child. If, and only if, the parent confirms their contact person status, they can then be forced by IRD to provide all email, phone and physical contact details of their child. But parents need to be aware that they can reject contact person status and thus not be put in the position of revealing their child’s physical whereabouts.

While the IRD item on the new law is headed “Arrest at Border”, the actual law is not so dramatic in that returning students should not be able to be arrested on entry. This is because the court must be satisfied that the defaulter is about to “leave or attempt to leave New Zealand”. Stepping off a plane at Auckland International is hardly the act of attempting to leave NZ. What might be a problem is getting out again without having made an arrangement about loan arrears. But if IRD attempts to have defaulters arrested when coming in I would think it might be a case for a claim of wrongful arrest.

The whole matter makes me quite uncomfortable as I see room for this power being abused, particularly as the law allows IRD to get the warrant signed off by a Court Registrar “if a District Court Judge is not available and the case appears to be urgent”. I am disappointed that Parliament did not see fit to ensure that such powers placed in the hands of tax collectors should at least have the discipline of prior approval of the Court. A Judge tends to be bit more accountable than the decision of IRD officers in conjunction with what could be an inexperienced and junior Deputy-Registrar with an “approved” stamp.”

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