Graduates who fail to make student loan repayments should face arrest like New Zealanders, education expert suggests

Comments made as recent report shows New Zealand's grads leave with just £23,300 in student debt, compared to England's almost £45,000, one of the highest in the world 

Aftab Ali
Student Editor
Thursday 28 July 2016 10:39
'Tax evasion and benefit fraud rip taxpayers off. Defaulting on your student loan could be regarded as just as bad,' says Hepi director
'Tax evasion and benefit fraud rip taxpayers off. Defaulting on your student loan could be regarded as just as bad,' says Hepi director

Graduates who move overseas and fail to repay their student loans after their studies should be arrested, suggests an education expert who has authored a report on what the UK can learn from New Zealand’s higher education sector.

Sam Cannicott, former Regent’s University London employee who now works for Statistics New Zealand, described how New Zealand’s “no-nonsense approach” to collecting student loan repayments from graduates overseas highlights the “timidity of the steps taken in the UK.”

He said: “Former students who fail to make repayments face arrest at the New Zealand border, which is proving to be a strong deterrent.”

His comments have come on the day the Higher Education Policy Institute (Hepi) publishes a major comparative study, Higher Education in New Zealand: What might the UK learn?, which has highlighted how New Zealand’s total student loan debt sits at around £6.8 billion - just six per cent of GDP. The UK’s total student loan debt, however, is approximately £70 billion, 16 per cent of GDP.

Although the country’s higher education sector is considerably smaller than the UK’s, the report insists British universities must learn from New Zealand post-Brexit, a nation which consistently performs well in international league tables.

As well as tougher controls over student loan repayments, the report suggests that, like New Zealand, the UK must provide “a red carpet” to international students, and also move to protect quality when liberalising student number controls.

Cannicott explained how “breaking the link” between income and loan repayments for graduates who head overseas, as New Zealand has done, “removes bureaucratic barriers” that make it difficult to chase repayments. He continued: “Brexit presents an opportunity for the UK to learn from New Zealand because there is less need to ensure the repayment terms of EU students are the same as those for domestic students.

“The UK is missing a trick by concentrating international student recruitment at the tertiary level. By following the New Zealand model and opening up the school system to international pupils, the UK could develop a useful pipeline for higher education institutions.”

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The report has come after a study from social mobility charity, the Sutton Trust, found England to have the highest level of debt per graduate than any other country in the English-speaking world. With England’s grads now leaving with almost £45,000 of student debt, New Zealand’s graduates leave with just £23,300, the lowest of any other anglophone nation.

Nick Hillman, director of Hepi, supported New Zealand’s tough action against those who avoid paying their loans, and said: “Tax evasion and benefit fraud rip taxpayers off. Defaulting on your student loan could be regarded as just as bad. Yet it is fairly common among both Brits and EU citizens who study in the UK before working abroad. Whitehall has never gripped this problem fully, but New Zealand’s experience suggests strong enforcement action works.

“If the Government is serious about wanting to sell off the student loan book to the private sector, tougher penalties for non-repayment would also increase its value. Given that the £9,000 fees regime is now maturing and postgraduate loans are being introduced, a new repayment regime for those living overseas should be a more urgent priority than ever before. Ministers, MPs, and peers should consider amending the Higher Education and Research Bill currently before Parliament to ensure higher repayment rates.”

Earlier this year, in a statement to the House of Commons, Universities Minister Jo Johnson warned the Government would prosecute graduates from across the UK and overseas who failed to pay their student loans back on time as part of a new strategy.

He said the new plans were needed to ensure the repayment system remains “fair, robust, and efficient” as the higher education system sees more people gain entry than ever before, due to a cap-lift on numbers.

The politician described how the Government is committed to maintaining the UK’s “world-class education system while living within its means,” and said: “As more loans are issued to new students each year, it is vital the repayment process is robust, convenient for borrowers, and working efficiently to ensure the sustainability of the student finance system, and value for money, for the taxpayer.”

The Tories, however, were accused of “maxing out the nation’s credit card” with students and graduates now being left to foot the bill at a recent parliamentary debate on a retrospective loan hike.

The debate was triggered following mass outrage when the Government made a U-turn on a 2012 promise by freezing the student loan repayment threshold at £21,000 until at least 2021, meaning graduates are now being forced to pay back more on their loans than originally promised.

In a hard-hitting statement which was echoed by other MPs throughout the debate, Helen Jones, Labour MP for Warrington North and chair of the debate, said: “The worst thing about this decision is it is retrospective. A commercial organisation would not be able to do this, but the measures it imposes on others it appears [the Government] is not prepared to adhere to itself.”

Johnson - the only Tory present at the debate - sought to address concerns by insisting the move ensures England’s higher education system is on a “sustainable footing.” He also described how university graduates today “benefit hugely” in terms of jobs compared with non-graduates, meaning higher salaries, and said: “We need to make sure higher education funding remains sustainable.”

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