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Inland Revenue

Tax Policy

PUBLISHED 15 December 2010

SOP to the Student Loan Scheme Bill released

The Minister of Revenue today released a supplementary order paper to the Student Loan Scheme Bill. Supplementary Order Paper 200 clarifies Inland Revenue's ability to recall a loan in cases of serious non-compliance. See also the Minister's media statement and the regulatory impact statement.

Hon Peter Dunne
Minister of Revenue

Media statement

Student Loan Scheme debt collection changes

Changes announced today will clarify Inland Revenue has the power to recall a student loan in cases of serious non-compliance.

The changes are contained in a Supplementary Order Paper to the Student Loan Scheme Bill and were released today by Revenue Minister, Peter Dunne.

Mr Dunne said that each year a number of borrowers default on making their student loan repayments. A defaulting borrower will be followed up by Inland Revenue and given the opportunity to remedy their defaults. However, for certain borrowers, the Commissioner of Inland Revenue will have the ability to call up the entire loan.

"This is about efficiency and effectiveness", said Mr Dunne. "All student loan contracts contain a clause allowing the loan balance to be recalled in certain circumstances, but in many cases Inland Revenue does not have the power to exercise the right of recall. Clarifying that Inland Revenue (the agency responsible for collecting student loan repayments) has the ability to exercise this existing term of the student loan contract will enable it to better manage cases of serious non-compliance."

The change will have effect on the day after the bill receives Royal Assent. Mr Dunne expected recall of student loans to be used in rare cases of serious non-compliance.

"It's a fairness issue. The vast majority of borrowers are doing the right thing and repay on time. However others don't and they can't be allowed to get away with it," said Mr Dunne.