Inland Revenue has collected more than $207 million in repayments since July last year from student loan borrowers living overseas in the past 9 months.
This is a 43 percent increase on the same period from the previous year.
Currently, 71 percent of overseas student loan borrowers are in default - and together, they owe about $2.3 billion in loans, penalties and interest.
Deloitte tax partner Robyn Walker explains why the IRD is so invested in getting these repayments back.
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Speaker 1 (00:00):
So it turns out that the IID crackdown on the
overseas student loan defaults is bearing fruit. IID has collected
more than two hundred million dollars in student loan repayments
in the past nine months, and that represents a forty
three percent increase on the same period the previous year.
Deloitte tax partner Robin Walker is with me on this.
He Robin, Hi, you surprised at how much they've managed
(00:20):
to rake in.
Speaker 2 (00:23):
I think there's definitely plenty to be collected from overseas.
So it is good to see that the investment that
ID has made an increasing their focus on this area
is actually paying dividends in terms of that increase in collections.
Speaker 1 (00:38):
What does this tell us? What do you reckon this
is down to? Is this down to increased resources for
IID or more direction for IID.
Speaker 2 (00:46):
I think it's a bit of both, right. So in
budget last year, IOD was allocated I think twenty nine
million dollars a year for the next four years to
increase their audit activity and that was split across That
was split across general order at work and also specifically
in relation to student loan borrowers. So what they said
(01:06):
last year was that they actually increased their FTEs working
on student loans from twenty to forty five, so more
than double the number of people focusing on this. So
I think they will have really ramped up their efforts
to contact people to just give them a bit of
a nudge along to say, hey, we know you're not
in New Zealand and we know you owe us money
(01:28):
and we want you to start making some repayments, become compliant.
Speaker 1 (01:31):
Again, does it pay for itself? Like the amount that's
being put the extra funding that's been put in to
actually beef up this team is they are collecting much
more than we're funding them.
Speaker 2 (01:42):
That's right, That's right. So normally on your when Iody
puts more money into audits, the return is around you know,
eight to nine dollars per dollar put in. So I
haven't done the math on this particular one, but it's
definitely proving to be worthwhile.
Speaker 1 (01:58):
Now, Robin, I am. I am so desperate to believe
that this represents a change in attitude towards how much
we respect the tax pay because in historically we have
just been so frivolous with money, right, Loans like the
COVID small business loans just given out unsecured. Does this
mean what we're seeing here that we are prepared to
be more respectful towards it or am I just hoping
(02:19):
too much?
Speaker 2 (02:20):
Well, this is more about collecting the money that people. Oh,
so obviously it's great for people to get an education
and the student loan facilitates people being able to do that.
And obviously we've got this real incentive for people to
stay in New Zealand after the finish they're studying, because
if they stay here then it's interest free. But as
soon as you leave New Zealand you suddenly start incurring interest.
(02:45):
But the issue there is that it's a lot harder
for you know, New Zealand to get its claws on
those repayments as soon as somebody leaves New Zealand. And
there's various statistics that are available, but it's quite it's
quite telling that what IDY has available, generally New Zealand
based borrowers are ninety five percent compliant, but overseas borrowers
(03:09):
the compliance varies. Like back in twenty twelve when the
statistics started, about fifty percent of people were consistently compliant
and then it dropped down, and I think the lowest
I've seen is twenty twenty three, it was nineteen percent
were compliant, and at the moment it's only thirty thirty
percent of people are compliant as of the end of
twenty twenty four. So yeah, there's definitely a lot of
(03:32):
people overseas that could start repaying more of their loans.
Speaker 1 (03:37):
Interesting. Hey, Robin, always good to talk to you. Thank
you so much, Robert Walker, Deloitte Tax Partner.
Speaker 2 (03:41):
For more from Heather Duplessy Allen Drive, listen live to
news talks.
Speaker 1 (03:45):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
So it turns out that the IID crackdown on the
overseas student loan defaults is bearing fruit. IID has collected
more than two hundred million dollars in student loan repayments
in the past nine months, and that represents a forty
three percent increase on the same period the previous year.
Deloitte tax partner Robin Walker is with me on this.
He Robin, Hi, you surprised at how much they've managed
(00:20):
to rake in.
Speaker 2 (00:23):
I think there's definitely plenty to be collected from overseas.
So it is good to see that the investment that
ID has made an increasing their focus on this area
is actually paying dividends in terms of that increase in collections.
Speaker 1 (00:38):
What does this tell us? What do you reckon this
is down to? Is this down to increased resources for
IID or more direction for IID.
Speaker 2 (00:46):
I think it's a bit of both, right. So in
budget last year, IOD was allocated I think twenty nine
million dollars a year for the next four years to
increase their audit activity and that was split across That
was split across general order at work and also specifically
in relation to student loan borrowers. So what they said
(01:06):
last year was that they actually increased their FTEs working
on student loans from twenty to forty five, so more
than double the number of people focusing on this. So
I think they will have really ramped up their efforts
to contact people to just give them a bit of
a nudge along to say, hey, we know you're not
in New Zealand and we know you owe us money
(01:28):
and we want you to start making some repayments, become compliant.
Speaker 1 (01:31):
Again, does it pay for itself? Like the amount that's
being put the extra funding that's been put in to
actually beef up this team is they are collecting much
more than we're funding them.
Speaker 2 (01:42):
That's right, That's right. So normally on your when Iody
puts more money into audits, the return is around you know,
eight to nine dollars per dollar put in. So I
haven't done the math on this particular one, but it's
definitely proving to be worthwhile.
Speaker 1 (01:58):
Now, Robin, I am. I am so desperate to believe
that this represents a change in attitude towards how much
we respect the tax pay because in historically we have
just been so frivolous with money, right, Loans like the
COVID small business loans just given out unsecured. Does this
mean what we're seeing here that we are prepared to
be more respectful towards it or am I just hoping
(02:19):
too much?
Speaker 2 (02:20):
Well, this is more about collecting the money that people. Oh,
so obviously it's great for people to get an education
and the student loan facilitates people being able to do that.
And obviously we've got this real incentive for people to
stay in New Zealand after the finish they're studying, because
if they stay here then it's interest free. But as
soon as you leave New Zealand you suddenly start incurring interest.
(02:45):
But the issue there is that it's a lot harder
for you know, New Zealand to get its claws on
those repayments as soon as somebody leaves New Zealand. And
there's various statistics that are available, but it's quite it's
quite telling that what IDY has available, generally New Zealand
based borrowers are ninety five percent compliant, but overseas borrowers
(03:09):
the compliance varies. Like back in twenty twelve when the
statistics started, about fifty percent of people were consistently compliant
and then it dropped down, and I think the lowest
I've seen is twenty twenty three, it was nineteen percent
were compliant, and at the moment it's only thirty thirty
percent of people are compliant as of the end of
twenty twenty four. So yeah, there's definitely a lot of
(03:32):
people overseas that could start repaying more of their loans.
Speaker 1 (03:37):
Interesting. Hey, Robin, always good to talk to you. Thank
you so much, Robert Walker, Deloitte Tax Partner.
Speaker 2 (03:41):
For more from Heather Duplessy Allen Drive, listen live to
news talks.
Speaker 1 (03:45):
It'd be from four pm weekdays, or follow the podcast
on iHeartRadio
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