- The debtor borrowed $15,000 but is now living overseas. He has repaid $18,000, however, the debt has increased through interest and penalties. If the borrower keeps on making his compulsory payments, the debt will not be repaid until he is 85 years old and he will have paid $330,000 in interest/penalties over the life of the loan.
- The debtor borrowed $10,000 in the late 1990s and was told that the debt did not need to be repaid if earnings were low. He moved overseas. The IRD took nearly 20 years to make contact and the debt is now $45,000. If the borrower pays $4,000 a year, the total interest/penalties are expected to be around $90,000 by the time the debt is paid off.
- The debtor was overseas but came back to New Zealand. Their student loan debt has grown enormously through interest and penalties while they were overseas. The first they hear from the IRD is when their employer tells them they have to make a 20% extra deduction from their wages to repay the student loan debt (over and above the standard student loan deduction). There was no discussion with the debtor prior to this directive and the debtor now doesn’t have enough money to feed their children.
If you are in a similar situation, or have any issues with your student loan debt, we can help. We can advise you on the options, including the best options for you in your situation, and we also act for many people in negotiating with the IRD and for those who need to apply for a New Zealand bankruptcy. Please contact us if you need help.