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:
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.