The government is going to chase student loan defaulters.

Thousands of student loan defaulters living abroad could be threatened with legal action as the Government seeks to recover millions of dollars of outstanding debt.

The Government today announced an Inland Revenue pilot scheme targeting loan defaulters across the Tasman would be expanded to target a further 50,000 debtors in Australia and the United Kingdom.

More than $4.7 million had been recovered in the 10-month pilot scheme, which had targeted 1000 Australia-based debtors.

The expanded scheme would involve contacting 50,000 loan holders either directly or through a nominated contact person in New Zealand, to seek payment of arrears or to set up a payment plan.

Legal action would follow if borrowers failed to comply.