Summary

This report looks at people who used the Student Loan Scheme while undertaking tertiary study, and then went overseas.

It profiles those overseas and looks at the characteristics of those who return to New Zealand and of those who stay away; and it examines progress in repaying loans by those stay away and those who return.

Key Findings

Who Goes Overseas

• About 19 percent of all account holders who had used the Student Loan Scheme and had left study in 1999 or later were recorded as overseas on our census date¹. This represented 61,800 people.
• Those who are overseas are disproportionately people aged between 25 and 34 who have studied at higher levels, often at a university, and have been successful in their studies.

Who Returns

• The characteristics of the people who returned from overseas are similar to the characteristics of those who stay away – in other words, it’s hard to predict who will stay away simply by looking at the demographic or study characteristics of borrowers.
• While people with degree level and higher qualifications are more likely to be overseas, they do not seem to be more likely to stay overseas.
• Of the people who had left study in 1999 or later and who were overseas on or after 10 April 2007, 26 percent had returned to New Zealand by 31 March 2010. Almost 70 percent of people who returned had been away for three years or less.

Repaying Loans

• Those overseas are likely to have left study with slightly larger loans than people who remain in New Zealand.
• The people who had gone overseas and are still away had made less progress on repaying their student loans.
• Those who go overseas and then return make substantial progress on their loan repayments – particularly those who completed their qualification – mostly because they then repay through tax deductions but also because they are more likely to have higher level qualifications which lead to higher earnings.
• Those who stay away make little or no progress in repaying their loans. The majority owe more than when they left study. Of those who stay away, the median loan balance had fallen only among those who had successfully completed a higher level qualification.

The most important messages to take from the findings in this report are:

• At any point in time, a high proportion of borrowers will be overseas-based. Many of them match the characteristics we think of as associated with the New Zealand tradition of the overseas experience, or OE - they tend to be reasonably young and have completed a tertiary qualification.
• Of those who were found to have returned, most did so after a reasonably short period - three years or less. But a large proportion had been away for longer than three years and was still based overseas at the end of our data series.
• And there were few distinctive characteristics of those who returned that mark them out from those who stay away.
• Those who go overseas tend to have left study with slightly larger loans than those who remain in New Zealand.
• While those overseas have poor repayment records overall, those who return make good progress in repaying loans. Those who return repay at a slightly faster rate than those who never went overseas, in part because they are more likely to have higher qualifications that lead to higher earnings.
• More than half of those who stay overseas for an extended period see their loan balances rise, not decrease, over time, as interest and penalties outweigh any repayments.

Footnote

1. 10 April 2010.