Moving borrowers to an electronic environment
ELECTRONIC ADMINISTRATION OF THE STUDENT LOAN SCHEME
Clauses 10 to 15, and 203 to 207)
Summary of proposed amendments
The bill contains amendments to allow information and notices to be provided electronically to borrowers and enable borrowers to access and manage their loan from anywhere and at anytime. Similarly, borrowers sending information to Inland Revenue, such as changes to their personal details and elections, will do so by electronic means.
Application date
The amendments will apply from 1 January 2012.
Key features
The proposed amendments introduce changes that will allow borrowers to manage their loan accounts by interacting with Inland Revenue electronically. As well as having online access to up-to-date loan information 24-hours a day anywhere in the world, borrowers will be able to communicate with Inland Revenue electronically to manage their loans.
Background
Some borrowers cannot easily contact Inland Revenue about their loan, especially if they are based overseas. Also most student loan scheme processes are paper-based. In addition, the student loan scheme repayment system is based on a computer system designed for tax collection. It is therefore difficult and expensive to administer, and requires significant resources to deal with system-generated errors.
A new loan management solution will offer borrowers the advantages of a modern electronic environment and allow Inland Revenue to deliver improved services to borrowers. A modern electronic environment provides borrowers with services tailored to suit individual needs, the ability to access relevant personal information and make it easier for borrowers to manage their loans with greater certainty. The main benefits for borrowers are:
- increased certainty and reduced compliance costs;
- fewer contacts that have to be made and easier electronic communication with Inland Revenue;
- improved quality of information for both borrowers and Inland Revenue;
- faster processing times by Inland Revenue; and
- improved timeliness and accuracy of responses to borrowers.
CONSOLIDATED VIEW OF TOTAL LOAN BALANCE, AND TRANSFERRING INFORMATION AND LOAN ADVANCES
(Clauses 10 to 15)
Summary of proposed amendments
Amendments deal with how information is to be shared between the loan manager and Inland Revenue, and enable Inland Revenue to provide borrowers with a consolidated view of their total loan balance.
Application date
The amendments will apply from 1 January 2012.
Key features
The amendments introduce the following changes:
- Inland Revenue will provide borrowers with a consolidated view of their total loan balance, removing the need to contact two agencies to obtain this information;
- the near real-time transfer of a borrower’s loan advance information and contact details from the loan manager to Inland Revenue. As loan advances are drawn down or borrowers’ contact details are changed, this information will be transferred to Inland Revenue to keep borrowers better informed of their loan details and obligations. Inland Revenue will inform borrowers of their total loan balance by providing them with access to view their loan on an internet site; and
- the sharing of information between the loan manager and Inland Revenue about people applying for student loans to confirm the applicant’s identity and to prevent fraud and ensure loans are assigned to the correct borrowers.
Background
Currently, student loans are transferred once a year from the loan manager to Inland Revenue, generally in February each calendar year. This annual transfer makes it difficult for borrowers to ascertain their total level of borrowings at any given time, particularly if they are still studying, and therefore possibly regularly drawing down on the loan. Borrowers are sent statements of their loan balances from both the loan manager and Inland Revenue or have to go to the two organisations’ websites to view this information. The proposed near real-time transfer of information will allow borrowers to easily access timely information about their total amount of student loan from a single website which will be managed by Inland Revenue.
The transfer of information will also allow Inland Revenue to maintain more up-to-date contact details for student loan borrowers. Often borrowers change their contact details frequently and it is difficult for Inland Revenue to maintain current contact details for all borrowers. The contact details being transferred will also include electronic addresses, when these are available. Consultation on the major policy reforms proposed in this bill showed considerable support for electronic communication. The transfer of electronic contact details will help facilitate this.
INFORMING AND NOTIFYING BORROWERS
(Clauses 203 to 207)
Summary of proposed amendments
The bill will change the way Inland Revenue communicates with borrowers. The most significant change provides Inland Revenue with greater use of electronic channels when communicating with borrowers, making it easier for borrowers to manage their loans and lowering administrative costs for Inland Revenue.
Application date
Most amendments will apply from 1 April 2012, while changes to the transfer of the consolidated loan balance will apply from 1 January 2012.
Key features
The amendments introduce the following changes:
- Inland Revenue will communicate with borrowers electronically when an active email address is available;
- Inland Revenue will make as many services as possible available electronically to enable borrowers to self manage their loans; and
- Inland Revenue will provide borrowers with personal access to information about their loan on the Inland Revenue website.
There will be four different ways for Inland Revenue, borrowers and employers to communicate with each other. These are to inform, notify, notify a person in writing, and formally notify.
“Inform” means for Inland Revenue to provide information to the borrower in a passive way, typically by providing a website or physical service where borrowers can access relevant information, or by giving public notice. For example, when Inland Revenue communicates with borrowers on matters that do not need to be specifically brought to a person’s attention, and when it is appropriate for a borrower to access the information at their convenience. It will be used mainly to provide borrowers with a consolidated view of their total loan balance, but also to provide general information – for example, a change to the repayment threshold.
“Notify” means for the borrower or Inland Revenue to actively communicate information through a broad range of methods. This can be notified by paper, by telephone, in person, by electronic means, or any other manner acceptable to the Commissioner. This method will be used when a degree of flexibility over the form of communication is appropriate because of the type of information required. For example when a borrower is required to notify Inland Revenue about an absence from New Zealand. If a borrower is notified through a borrower portal on the Inland Revenue website, the Commissioner will also have to draw the borrower’s attention to the information being available on the web by sending a text message or email to the borrower.
“Notify a person in writing” means to communicate using the methods available in “Notify”, including by electronic means such as an email, but excludes in person or by phone. This form of communication will be used to communicate with borrowers in a formal way, when it is not appropriate for the information to be communicated in person or by phone. It may be used, for example, to notify borrowers of an assessment, that they have an unpaid amount that must be paid, or that late payment interest has been changed.
“Formally notify” means to communicate to borrowers in writing and on paper. Electronic communications are excluded from this definition. Although it is used infrequently throughout the bill, an example of this type of communication is outlined in clause 162, which provides for the escalation of objections to the chief executive of the Ministry of Social Development. If a borrower wishes to escalate an objection under this provision, they are required to formally notify the chief executive of this in writing.
Background
The current student loan notification requirements for Inland Revenue are very restrictive and often must be in the form of a formal letter. Currently, Inland Revenue sends out 26 million letters a year, including letters to student loan borrowers, largely because of these and similar restrictions. The proposed changes to the form of communication allowed should provide greater flexibility so Inland Revenue can tailor services to the needs of borrowers, and adapt as new channels of communication become common. They will also allow much more extensive use of electronic communications, a move strongly supported during consultation with borrowers. It will particularly benefit borrowers who are based overseas, who are often mobile, and who because of international timelines, find it difficult to contact Inland Revenue during working hours.