The nephew of the Cook Islands Prime Minister is now free to leave New Zealand, having become the first man to be arrested for ignoring requests to repay his student loan.
Ngatokotoru Puna, 40, from the Cook Islands studied at Auckland University 20 years ago.
He was detained after coming back to New Zealand for a visit when he tried to leave the country.
The arrest is the first time legislation giving the Inland Revenue Department (IRD) such power has been used.
He has been living overseas since 2004 and his original loan was $40,000 which has ballooned through interest and penalties to more than $120,000.
He had to borrow $5000 from his parents get his passport back and so the case against him would be dropped.
"We tried to engage with the customer on numerous occasions by phone, email and letter and he's failed to engage with us and it got to the point where we've decided to use our powers in the most judicious way and arrest him as he tried to leave the country on Monday, " an IRD collections manager, Stuart Duff, told 3 News.
Mr Puna said to Judge Charles Blackie that it's "unreasonable" to expect him to pay so much back.
He says he works for a low salary as a teacher in the Cook Islands and has five children.
He was here to speak at a conference, invited by the Association of Maths Teachers.
Mr Puna says he never had any communication from IRD that he owed so much money, and prior to 2012 earned under the $30,000 threshold where loans don't have to be repaid.
Student loan borrowers who are well behind on repayments and ignore requests from Inland Revenue may have an arrest warrant issued as of a law change in March 2014, stopping them from leaving New Zealand until they resolve their arrears.
Until now, no arrest warrants have been issued despite IRD having tracked a small number of overseas-based defaulters.
"Most of our borrowers are meeting their repayments and it's only in the most extreme cases that we will use the power that we have and as a last resort to get the borrower to engage with us," the IRD said.
Former students who are serious loan payment defaulters are first contacted by the IRD to discuss repayment options and are given time to repay some of their loan.
There are special circumstances whereby relief from repayments can be granted for hardship reasons. However, Mr Puna had not made any such application.
If the court is satisfied that a person is knowingly avoiding their student loan repayment obligations and is about to leave the country, they can issue an arrest warrant.
The IRD were not able to comment as to whether the arrested man will be allowed to leave the country.
The University Students' Association has criticised the arrest.
3 News
