Five thousand five hundred student loans have been canceled since 2010 after borrowers declared bankruptcy.
Abroad defaulting borrowers on their student loans were blamed for a total of $135 million in loans written off.
During the same period, the average student loan balance went from $16,731 to $22,630. One person had nearly $360,000 in student debt forgiven in 2019.
The increase is attributed to defaulting foreign-based borrowers on their loans.
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A person can go bankrupt when they cannot repay one or more debts totaling at least $1,000.
By law, student loan debt must be forgiven when someone is declared bankrupt.
However, an IRD spokeswoman said there could be a delay between the borrower declaring bankruptcy and the debt being written off, so the person can be declared bankrupt for a year and its debt canceled the following year.
According to Student Loans Annual Report 2019foreign-based borrowers owed 91% of the $1.5 billion in outstanding student debt.
For borrowers living in New Zealand, student loans are interest free.
But when a Kiwi with student debt is abroad for six months or more, interest is charged.
People based overseas who have not repaid their student loan may be stopped at the border upon arrival in New Zealand.
The spokeswoman said as of April 2020, student loan debtors would be able to make payments from more countries including UK, Europe, US and Canada.
Liam Sutherland is director of external relations for SavY, a charity that runs free financial literacy workshops for young people.
He said declaring bankruptcy had huge implications for people living in New Zealand, but for Kiwis living overseas, being declared bankrupt in New Zealand would have little or no impact.
“You kind of get no consequences and all the benefits.”
Lower interest rates applied to foreign student borrowers could encourage them to repay debt rather than default, he said.
It was also important that the students understood the terms and conditions of the loan before signing the contract.
In January, a woman was arrested at Auckland International Airport on outstanding student debt.
She appeared in Manukau District Court before find an agreement with the IRD.