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IRD Admits Over-Billing Student Loan Borrowers

IRD Admits Over-Billing Student Loan Borrowers Overseas

Calls by tertiary student website for the Inland Revenue Department to explain why some student loan borrowers received over-inflated repayment demands, have finally been met.

An unknown number of overseas borrowers, who are paying back their loans based on compulsory repayment estimates, have been sent incorrect statements by the Inland Revenue.

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 Inland Revenue said in a statement to, that the over-estimated repayments were calculated using an incorrect loan balance.

Borrowers affected by the miscalculated statements are those who: - have left the country during the 2002 income year and became a non-resident for tax purposes, - made repayments towards their loan during the 2002 income year, - did not file an IR3 tax return for the 2002 income year prior to their departure, and - had a loan balance greater than $15,000 as at 31 March 2002.

Colin MacDonald, the General Manager of Business Development and Systems at the Inland Revenue, said the department is currently unsure how many borrowers have been affected by the mistake, but they believe it only affects statements issued this year.

The billing error was revealed after UK-based borrower Craig Dotchin, questioned the size of his compulsory repayment estimate in a Student Loans advice column on

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.

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.

The Inland Revenue statement said affected borrowers won't be out of pocket in the long term and will not pay more for their student loan.

The over-billing 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. is calling on the Inland Revenue to issue corrected statements to affected borrowers, apologise for the billing mistake and to fix the system so it doesn't happen again.


More Information: Kate Oliver, Editor, - 021 895 034 or 09 623 7491 Liam Butler, Student Loans Columnist - +44 7816 1941 24

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