Student loan arrest worries overseas Kiwis

Student loan arrest worries overseas Kiwis

New Zealanders living overseas with unpaid student loans are fearful they could find themselves arrested at our border.

It follows the arrest of 40-year-old Ngatokotoru Puna, who was detained at Auckland Airport on Monday.

He's been living overseas since 2004. His original loan was sitting at $40,000, which has ballooned through interest and penalties to more than $120,000.

The arrest is the first of its kind since Inland Revenue was given the power to do so, but has incited fear in some Kiwis living abroad.

Melbourne-based Jaymie Coleman is one of them. Her loan has grown from $8000 to $64,000 over the past 18 years.

The 36-year-old says she borrowed the money for a tourism course, and after returning to New Zealand when she was 21 had tried to contact the IRD to arrange payment.

"They basically said they couldn't find me … and pretty much 'we can't help you'."

But last October while visiting New Zealand, Ms Coleman was contacted by the IRD, who told her she had to pay half the amount owing of $34,000.

She says she has since spoken to the IRD about a payment plan, but is refusing to start until she receives documents showing a breakdown of the interest accrued.

The single mother says she's now afraid to return to New Zealand, and is concerned her situation could find her behind bars.

"If I go to New Zealand on my own and get arrested, what about my children back in Australia? It's pretty scary."

The New Zealand Union of Students' Association says the arrest has sent a chilling message.

"We are concerned that this will turn those who are overseas with student loans into permanent refugees, and do little to encourage further compliance with the student loan scheme."

Inland Revenue says since the arrest it has noticed an increase in the number of borrowers seeking advice from its contact centre.

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