Woman arrested at airport over student loan debt

A woman has been arrested at Auckland Airport for failing to repay her student loan debt, new reports show.

The NZ Herald reported the New Zealand woman had been visiting her unwell mother in New Zealand when she was arrested on Friday as she attempted to fly to the United States, and spent the weekend in jail before appearing in court on Monday.

A NZ tax office Inland Revenue spokesperson confirmed the arrest happened, but did not release further details.

"The best advice we can give overseas based borrowers is to pay any outstanding amounts,” the spokesperson stated.

• Also read: ATO reveals top 3 mistakes taxpayers are making this year

• Also read: This is why you might never get that $1,080 tax cut

• Also read: The ATO is in overdrive to keep up with impatient Aussies chasing their tax cuts

“If that is not possible, we encourage borrowers to talk with us about their situation. Our staff are always willing to help and we have various relief options available to help manage repayments for those who are in a position of hardship."

Student advocates took to radio stations to slam Inland Revenue for its actions, which they claim make borrowers “student loan refugees”.

According to the NZ Herald, around 70 per cent of overseas borrowers are in Australia, and the Australian Taxation Office now shares information with the NZ government to identify them.

Student loan arrests in NZ

Student loan borrowers overseas are required to make minimum repayments based on their student loan balance to avoid late penalties.

For a loan of between $1,000 and $15,000, the minimum repayment is two payments of $500 twice a year. The repayment amount increases for larger loans.

Laws introduced in 2014 gave the NZ tax department the authority to apply for arrest warrants for student loan debtors attempting to leave the country, but it was deemed a “last resort” policy.

Since the 2014 laws came into place, nine arrests have been made and just $230,000 in overdue student loan debt has been recovered, figures show.

Travelling overseas with a student loan debt?

While Australia doesn’t have an arrest policy, if you’re an Australian with a student loan debt and intending on moving overseas, the ATO has warned these debts don’t disappear.

"Moving overseas does not cancel student loan debts and your repayment obligations do not change with your address. Current laws give us the power to pursue these debts overseas," ATO assistant commissioner Karen Foat stated.

This means expats with HELP or HECS debts can expect to be contacted, and, under new rules, Australians with income-contingent loans must notify the ATO of their new address and lodge an overseas travel notification.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, property and tech news.