Border arrests for student loan debtors 'exacerbates the situation' - Education Minister

The threat of arrest at the border can "exacerbate" the problem of overseas student loan debtors failing to pay back their loans, the Government says.

An Official Information Act request filed by Newshub found just 10 people had racked up a total of $4 million in unpaid student loans. All 10 of them live overseas.

Education Minister Chris Hipkins told Newshub the unpaid loans are concerning, but the threat of arrest might be preventing people from returning to New Zealand, where enforcement is easier.

"I think arrest at the border sometimes exacerbates the situation, because it means those people never come home. Sometimes you're better to get them home then into an arrangement where they can start making payments."

But he said the Government was not proposing any immediate change - any changes would be "longer term".

Education Minister Chris Hipkins.
Education Minister Chris Hipkins. Photo credit: Anna Bracewell-Worrall/Newshub.

Each of the 10 biggest student loan borrowers owe more than $370,000 each.

Statistics from 2016 show around 112,390 student borrowers live overseas, with an estimated $3.25 billion of debt, and 70 percent are behind in their loan repayments.

Paula Bennett told The AM Show on Tuesday morning all student loan debtors need to do to avoid arrest at the border is get in touch with IRD and make arrangements to start repayments.

"The Labour Government have said they are looking at dropping that and not actually collecting from people at the border or addressing them there, and that's wrong," Ms Bennett said.

"We absolutely need to be tougher. They owe this money. All we are asking is they make repayments. There are other people - literally thousands of them - that are paying back their student loans, and these guys are reaping the rewards of the fabulous New Zealand education and they owe us money, and they should pay it."

You can watch Ms Bennett on The AM Show in the video at the top of this article.