18 Mar IRD to Tighten Rules on Student Loans
(Published in New Zealand Taxation)
The Student Loan scheme is set to change, with stricter rules being implemented on borrowers, especially those who travel overseas for extend periods of time.
On March 13th Parliament received a report from the New Zealand Finance and Expenditure Committee on the upcoming Student Loan Scheme Amendment Bill. The newly published report contains a summary of the major changes that will be implemented in the bill, along with responses to public submissions that were made regarding the national student loan scheme and potential changes to the system.
According to the report, one of the biggest changes brought in by the new bill will be the exclusion of loses from the calculation of incomes for student loan repayments, which will increase personal responsibility for debt repayment and maximize the amount of payments of loans.
The new Bill will also bring in rules mandating that all new student loan applications must nominate a third party to be responsible for maintaining up to date contact details of the borrower, and providing the information to Study Link upon request. The new regulations will allow the Inland Revenue Department to receive and use the contact details of the nominated person, when trying to reach a student loan holder who has left New Zealand.
The repayment holiday currently available to borrowers who travel overseas will be reduced from three years to one year. Anyone applying for the repayment break will be required to provide details of a New Zealand based contact person in order to be granted the holiday.
The new report also contained several questions that were raised by the public regarding the Student Loan amendments, however, the Committee did not recommend changes to the Bill following the raised concerns.