Explain Student Loan Repayment Over-Billing
Studentz.co.nz Demands IRD Explain Student Loan Repayment Over-Billing
Tertiary student website Studentz.co.nz demands the Inland Revenue Department explain why some student loan borrowers repayment obligations have been miscalculated, resulting in Inland Revenue issuing grossly over inflated repayment demands.
Studentz.co.nz understands the incorrect statements affect overseas borrowers who are paying back their loans based on compulsory repayment estimates.
This is a very serious issue as more than 17,820 student loan holders live overseas, owing on average more than $16,400 each. They have a combined debt of more than $292,592,000.
Overseas-based graduates who have a loan of $15,000 or more are required under the Student Loan Scheme Act to pay back one-fifteenth (1/15) of their loan each year.
The Inland Revenue Department has erroneously issued some borrowers demands for more than twice this amount.
The error was revealed after UK-based borrower Craig Dotchin, questioned the size of his compulsory repayment estimate in a Student Loans advice column on Studentz.co.nz.
Former Inland Revenue National Office employee, Liam Butler, answers questions posted to the column regarding student loans. Mr Dotchin contacted the advice column after he received a compulsory repayment estimate of $13,333 on his $75,000 student loan.
Using the Student Loan Scheme Act's 1/15th calculation; he was shocked to find that Inland Revenue had demanded he pay $9000 more than they were legally entitled to.
Studentz.co.nz contacted the Inland Revenues Department's Student Loans spokesperson Darren Lee, who checked Mr Dotchin's records and confirmed the error. He also confirmed that Mr Dotchin's error was not an isolated case, and said overseas borrowers who met "certain specific circumstances" were also affected.
Studentz.co.nz have made repeated attempts to find out the "certain specific circumstances" of the affected student loan borrowers and the number of people who may be affected, but Inland Revenue have remained tight-lipped.
"If the IRD have made a mistake we want them to admit it," said Studentz.co.nz editor Kate Oliver. "We want to know how many borrowers are affected and what the IRD are going to do about it, especially if borrowers have paid penalties."
This miscalculation is inexcusable. Inland Revenue punishes borrowers who don't meet their repayment obligation by increasing their loan debt by 2 percent of their total student loan arrears each month.
"It's hard enough paying back a student loan without being sent a bill asking for twice as much money as the IRD are entitled to," Miss Oliver said.