Dom Post on loan defaulters

The Dom Post editorial:

There is a good argument for getting tougher with those living overseas who won’t repay their loans. Too many have decided to ignore their obligations.

Now the Government will require them not only to repay more quickly, but it also warns that persistent defaulters may be arrested at the airport.

This is punitive, unpleasant, and likely to be unpopular in a democracy that prefers the carrot to the stick. But nobody can complain.

The Government, after all, has taken a gradual approach. It offered amnesties and a chance to come to an arrangement with the IRD. It has also made it technically easier and cheaper to transfer the money home.

Many have responded reasonably: $64 million in outstanding loans has been repaid. However, some have ignored the offer and refused to repay. That can’t continue.

After all, if the people concerned had a low income and found it genuinely hard to repay, they were free to argue the point and try to make a deal with the tax-gatherer. Others could easily repay their loans but simply ignored the Government’s inquiries.

Those who have refused to do anything now face the threat of the bailiffs and, if they persist, of arrest. It’s hard to know what else the Government could do. Those who refuse to respond are breaking the social contract.

The social contract has responsibilities on both sides.

Students, after all, do not pay the full cost of their tertiary education. Even with the loans, they are being subsidised by the taxpayer. In return for that aid, however, they must make a contribution themselves.

This does not threaten the hallowed institution of OE, as Labour claims, or make it less likely that our high-fliers will return to the nest. Those who do their OE can’t just leave their fiscal obligations behind them. And highly -skilled people who stand to earn big salaries during their lifetimes can expect no sympathy if they default on their loans.

Repaying a loan should not be seen as optional.

The editorial however criticizes students aged over 40 having to get loans, instead of allowances.