More than 5,500 overseas-based student loan borrowers have returned to New Zealand since April.

But Inland Revenue says it won't be tracking down those with an overdue bill, in managed isolation.

IRD data shows the total value of all student loans on the Government's books is 16 billion dollars - and 3.5 billion dollars are held by people living overseas.

Of the $1.5 billion considered overdue - more than 90 per cent is owed by those living outside New Zealand.

An IRD spokesperson says its policy was to wait around four months to send a letter to borrowers returning from overseas.

New Zealand Union of Student Associations vice-president Sam Smith says it's good IRD isn't taking a punitive approach as soon as people come through the border.

"I mean, most of them are going to be precarious financial situations, having lost their jobs, so it's good that IRD is not targeting them right off the bat."

Once they've been back in the country 183 days they're regarded as New Zealand based borrowers - and deductions are made from their pay.

Smith says in that 183 days, these people are continuing to incur interest - which will put them in a worse financial situation. 

"At a time when a lot of them would have lost their jobs, if anything, the IRD should be looking at reducing that period in which they are classified as an overseas-based borrower."