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If you start now there is still time to get your student loan debt problem resolved before Christmas (in most cases). Getting it resolved will mean no risk of arrest at the border, or of having your Christmas holiday plans destroyed by debt collectors.
Please contact us if you need prompt help to understand your options or to get a resolution underway. The Answer: A part finished degree with a student loan debt. Figures released this week show that 36% of bachelor degree students do not complete their degree. Some students find that the quality of the degree, or teaching institution, is not worth spending more time and money on, others find that tertiary education is not for them. For some it is the realisation that the jobs will not be there for them when they graduate. Lachlan Maclean, a biology and computer science student stated that: "It's a lot of money to be going to university. There's really no point continuing, doing three more years, if you're going to get a mediocre job out of it." Our view is that the system is deeply flawed. Nevertheless, we have what we have, for now. Our advice to people thinking about spending tens of thousands of dollars on tertiary education is to be sure that this is what you want, to be sure that the cost is going to be worth the anticipated future return, and that the quality is acceptable.
We are often asked what is the "ball park" amount that the IRD will write off if you offer to pay off your student loan debt. The answer is that there is no ball park, and the likely write off varies from case to case. Some of the relevant factors include the break down of the debt, how much you are offering to pay, how the offer is being funded, your personal circumstances, and why the debt got behind.
In some cases significant write offs are possible, but it will depend on the circumstances. The IRD is supposed to respond to communications within 10 working days, in most cases. You would think that getting things resolved quickly would be good for business. We have had many clients who say that even though the IRD knew their contact details, they received no information about their debt for many years. During the time that the IRD made no contact, enormous interest was added to the debt. Another example is a case, we know of, where contact was made with the IRD, in March, to try to resolve the student loan debt. It is now 7 months later and the IRD has still not provided a real response. Of course, interest has continued to build. Often clients have told us that they believe that the IRD's delays are deliberate so that more interest can be charged. We were sceptical, but this year we have seen a deterioration in IRD time frames and then we came across this information.  In the 2016/17 year, interest of $120 million was charged, and penalties of $72 million. Total ordinary and penalty interest for one year was $192 million, or $526,027 every single day. Every day that resolution is delayed, the IRD is potentially better off by more than $500,000. Naturally, this amount is spread over a large number of cases, and the longer the delay the greater the chance that the IRD receives zero because the borrower becomes bankrupt or dies, but these figures show that there is a huge benefit to the IRD in delay. Once again, student loan borrowers are facing shabby, discriminatory treatment. The Government has announced tough new measures to deal with loan sharks. Many people, that we work with, feel that the IRD is the worst loan shark around. Prime Minister Jacinda Ardern and Commerce and Consumer Affairs Minister Kris Faafoi say that new laws are needed because: “This Government is committed to making New Zealand the best place to raise a child...to do that we must stop families becoming trapped in the appalling debt spirals and poverty that result from onerous lending and payback terms...These new measures will halt the very worst of those preying on vulnerable and desperate people while enabling borrowing that meets their needs in an affordable way... They will protect families through capping the total interest and fees charged loans, introducing tougher penalties for irresponsible lending Interest and fees on high-cost loans will be limited to 100% of the amount borrowed (the loan principal). For example, if an individual borrows $500, they will never have to pay the lender back more than $1000, including all fees and interest. Lenders will have to be responsible, they will face penalties if they misbehave, borrowing costs will be transparent, and there will be access to help during the debt collection process. Shouldn't student loan borrowers also have those protections? Don't they also deserve to be protected from a spiral of debt and poverty? Shouldn't their children also matter? Why are they not protected from irresponsible lending? We have many student loan borrower clients where the amount demanded by the New Zealand government/IRD is more than 7 times the amount borrowed, not the maximum of double referred to in this legislation. Shouldn't the government have to abide by the same standards as other lenders? Failing to so drives many borrowers to the brink of despair, and the relief of bankruptcy, things that could have been avoided if they were treated with compassion.
Recently we experienced an IRD officer who refused to provide information about a client account to which we (and the client) were legally entitled. In this case it was information about penalty interest.
It is rare that the IRD can withhold information about your debt, including the original loan contracts and charges (note that, in some cases, this information is held by Study Link). Normally the IRD respects its disclosure obligations but there are times when people have to deal with someone who makes things difficult. If this happens to you, we can help, or you can make a formal demand for your information under the Privacy Act and the Official Information Act, make a formal complaint against the IRD, or ask the Ombudsman to help you. Don't let the process get you down. You do have rights and you also have the right to have your rights honoured. "Kristina has a no-nonsense approach to her work. She understands your concerns and works diligently to come up with a solution that is best for your situation. She is direct in her communication but above all, she is prompt. Every time I needed to speak with her, despite the time-difference, she would reply within 24 hours. She answered all of my questions to the best of her knowledge and her understanding of the topic is vast. All told, I waited 1 month for my situation to be resolved. Thanks Kristina and her team - I am forever grateful." Contact Kristina today if you want to talk about putting an end to your debt nightmare.
The IRD is deliberately targeting student loan debtors compared to other tax debtors. It has a large team of 64 people chasing student loan debtors. It has no team dedicated to chasing unpaid tax on property deals even though it was expected that this could yield the IRD $50 million a year. So single minded is the IRD's pursuit of student loan debtors, that it is collecting 170 times more from Australian resident student loan debtors than from Australian resident income tax debtors. It appears that student loan debtors are treated far more aggressively because they are seen as low hanging fruit and easy targets. Terry Baucher, Accountant, states that the IRD: targeted people who were likely to pay without fuss. Where the IRD fears it will get push-back it might not try it on, but they're happy to try it on with others, as is the case with student loans. We know that many of you had hoped for a more compassionate attitude, and a greater variety of resolution options, following the change in government. It appears that this will not be the case.
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