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Inland Revenue

Tax Policy

PUBLISHED 17 August 2011

Student Loan Scheme Bill passes

The Student Loan Scheme Bill introduced on 27 August 2010 passed its final stages in Parliament today and now awaits Royal assent. For more information see the media statement.

Hon Peter Dunne
Minister of Revenue

17 August 2011

Dunne: serious defaulters’ student loans can be recalled

Revenue Minister Peter Dunne today welcomed new legislation allowing the student loans of serious defaulters to be recalled in full.

Speaking as the Student Loan Scheme Bill was passed in Parliament this evening, Mr Dunne said the vast majority of domestic based student loan borrowers met their loan requirements and had no reason to be concerned.

“There are, however, some individuals who clearly do not comply with their obligation to repay their loans. This bill allows Inland Revenue to recall those loans in full, with outstanding interest and penalties,” Mr Dunne said.

“This is not a harsh move. It is about fair and appropriate real world consequences of the same sort you would face if you continued to remain in serious default on your mortgage.

“It is a last option for dealing with those who consistently renege on their repayment responsibilities. It would only be used when all reasonable efforts to have the individual concerned meet their obligations have failed,” he said.

The first cases for recall will involve a number of borrowers under the overseas borrowers pilot scheme currently underway in Australia.

Mr Dunne said, however, that the Student Loan Scheme Bill was “more carrot than stick”.

“This law change will also make it easier for student loan borrowers to manage and repay their loans and simplify the way Inland Revenue administers the student loan scheme.

“This new law will eliminate much of the administrative complexity and confusing paperwork that has made things more difficult for student loan borrowers than they needed to be,” he said.

“Instead of having two agencies, Inland Revenue and StudyLink, holding their loan balance as they do now, borrowers will be able to access a single consolidated view of their loan balance online at any time and from anywhere,” he said.

“In addition, most borrowers whose income is from salary and wages will benefit from a further simplification which removes the current annual end-of-year assessments or ‘square-ups’. However, borrowers who have significantly overpaid their repayment obligations on a pay-period basis will be able to apply for a refund, and those who have significantly underpaid will have catch-up deductions.”

Other changes include simplifying the current penalty rules when borrowers fail to make their required repayments and the introduction of an annual administration fee for student loans, as announced in Budget 2010.

Most of the proposed changes including those which benefit borrowers, such as providing a consolidated view of their loan and the removal of the end-of-year assessment, apply from 1 April 2012. The remainder apply from 2013.


Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985