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Overseas borrower liable for student loan debt when IR unable to contact them

Ombudsmen Act 1975
Peter Boshier
Issue date:


Complaint about the administration of a student loan of an overseas borrower – Inland Revenue Department (IR) unable to notify borrower about interest and penalties on student loan – Ombudsman found that IR did not act unreasonably – legislation does not prevent interest and penalties accruing in the event that IR is unable to contact the borrower. 


The Chief Ombudsman received a complaint from an overseas borrower about the way the Inland Revenue Department (IR) administered their student loan and the addition of interest and penalties that they were required to pay.

The borrower travelled to New Zealand in 2006 to undertake tertiary study and remained in the country until 2008. During this time they obtained two separate student loans, one for $10,135 and another for $10,683 to cover course fees and course-related costs. The borrower made no payments towards these loans after leaving New Zealand nor did the borrower keep IR updated with their contact details.

Since 2019, IR has dedicated specific resources to contacting overseas borrowers. This is because non-payment of their loans is a significant financial issue for New Zealand. This means that IR is better equipped to locate overseas-based borrowers who had otherwise disengaged with IR, and to advise them of their repayment obligations for their student loans.

In 2019, IR contacted the borrower. IR posted a letter on their personal online “myIR” account confirming that interest and penalties had been accruing on their student loans and that the outstanding amount owing was around $47,500. [1] Attempts to negotiate repayment of this debt failed and IR’s offer of remission (of around $6,500) was not accepted by the borrower.

The borrower complained to the Ombudsman that IR had failed in its statutory obligation to notify borrowers and therefore was not able to place interest and penalties on the student loan. They also complained that the remission offers from IR were unreasonable when all circumstances of these loans were considered.


The Ombudsman formed the final opinion that IR’s administration of the student loan and its remission offer was not unreasonable. IR correctly applied the interest provision of the Act. The Ombudsman considered it was difficult to be critical of IR as it had not been in a position to contact the borrower at an earlier juncture.

This case note is published under the authority of the Ombudsmen Rules 1989. It sets out an Ombudsman’s view on the facts of a particular case. It should not be taken as establishing any legal precedent that would bind an Ombudsman in future.


[1] When an overseas borrower’s assessment comes due, the assessment portion ceases to attract loan interest, but if it is unpaid it will attract late payment interest. Return to text

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