A man who ignored requests to repay his student loan has been detained at the border trying to leave New Zealand after returning home for a visit.
The arrest is the first time legislation giving the Inland Revenue Department (IRD) such power has been used.
The Kiwi man has been living overseas since 2004 and has a student loan of more than $20,000.
The man was bailed to his in-laws’ house after appearing in court earlier in the week and is due back in court today.
“We’ve tried to engage with the customer on numerous occasions by phone, email and letter and he’s failed to engage with us and it got to the point where we’ve decided to use our powers in the most judicious way and arrest him as he tried to leave the country on Monday, " an IRD spokesperson told 3 News.
There will be no charges laid as the IRD have come to an arrangement with the man, the spokesman said.
Student loan borrowers who are well behind on repayments and ignore requests from Inland Revenue may have an arrest warrant issued as of a law change in March 2014, stopping them from leaving New Zealand until they resolve their arrears.
Until now, no arrest warrants have been issued despite Inland Revenue having tracked a small number of overseas-based defaulters.
“Most of our borrowers are meeting their repayments and it’s only in the most extreme cases that we will use the power that we have and as a last resort to get the borrower to engage with us,” the IRD said.
Former students who are serious loan payment defaulters are first contacted by the IRD to discuss repayment options and are given time to repay some of their loan.
There are special circumstances whereby relief from repayments can be granted for hardship reasons. However, the man arrested had not made any such application.
If the court is satisfied that a person is knowingly avoiding their student loan repayment obligations and is about to leave the country, they can issue an arrest warrant.
The IRD were not able to comment as to whether the arrested man will be allowed to leave the country.
The University Students' Association has criticised the arrest.