Nine To Noon
Are student loan interest rates, penalties blocking returns?
Apr 22, 2025
Dave Arnath, a tax barrister with expertise in student loans, tackles the financial plight of New Zealanders living abroad. He reveals how escalating penalties and high interest rates complicate loan repayments for borrowers overseas. Arnath discusses the potential for penalty remission, emphasizing the need for compassion in repayment frameworks. The conversation also highlights the economic impact of rising rates on returning entrepreneurs, calling for flexible policy solutions to support these Kiwis while balancing taxpayer interests.
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Quick takeaways
- The punitive penalties and rising interest rates on student loans are creating financial barriers for New Zealanders living abroad, hindering their potential return home.
- Proposed solutions, such as the remission of penalties under Section 146 of the Student Loan Act, aim to alleviate burdens while ensuring responsible repayment.
Deep dives
Challenges of Overseas Student Loan Debt
The episode highlights the significant challenges faced by New Zealanders living abroad who have accumulated student loan debt, totaling $2.2 billion. Many of these individuals are overwhelmed by mounting penalties and high interest rates, which can reach as much as 8.9% for overdue payments. A lawyer, Dave Arnath, illustrates this issue with examples of clients who owe substantial amounts, including $160,000, of which $80,000 is solely in penalties. The punitive nature of these penalties creates a barrier for many Kiwis wishing to return home, as they face financial burdens that feel insurmountable after years of living overseas.
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