The little known discounts you can get on overdue student loans

An Auckland-based lawyer who represents student loan borrowers with overdue debt recently helped someone get a $100,000 discount through a scheme he says not enough people know about.A law change in April saw the Inland Revenue commissioner receive greater power to provide relief from interest on an overseas borrower's loan.That's a step further from the commissioner's previous powers, which were to be able to cut the penalties that were added on top of interest when an overseas-based borrower was late with payment.The department released its annual report last week showing total penalties charged to borrowers - now at $1.27 billion - are approaching the $1.4b that represents the original loans borrowed, which are overdue.Lawyer Dave Ananth said he's easily getting 20 calls a week from overseas borrowers worried about overdue loans.Lawyer Dave Ananth.RNZ / Liu ChenMany of the calls are coming from people in Australia wanting to visit home, while some come from Europe or South Africa.Ananth told Nine to Noon people are overwhelmed with their student loan debt and don't know how to deal with Inland Revenue."A lot of people I deal with are overwhelmed by a $20,000 loan taken 20 years ago is now $80,000 and how do I deal with it?"That's where Ananth comes in. He explains to them there is a scheme where the IRD commissioner may grant them remission on their interest if they are willing to provide a raft of documents to support their claim.He has managed to help student loan debtors get "quite a bit" off their total debt - sometimes up to 50 percent of the interest."I achieved quite a bit yesterday for someone who had quite a huge student loan and got more than $100,000 worth of remissions of penalties and interest because it was huge."Ananth said a major condition IRD has with the scheme is that the debtor must be willing and able to settle within a month."If settlement is reached, you've got a 30 day window to settle."But Ananth said he didn't believe there was enough awareness of the ability to negotiate a discount for overseas borrowers.He said a lot of the people who contacted him had no idea they could ask for remission on their penalties and found the whole process daunting - choosing to bury their heads in the sand instead."We need to do more in giving that information, either from IRD themselves or going out there and getting this information across."Ananth said he was trying to reach a compromise and "win-win" situation for both IRD and the person in debt."The taxpayer-funded loan gets back the money he had lent, gets back a bit of cost, gets back a bit on interest and closes the account."IRD were approached to provide comment on Nine to Noon but declined.In its annual report, the department said it has increased its contact with overseas borrowers, which has helped lead to a 26 percent increase in money received from them in the year to June, compared to the previous year.