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Student loans

Under the Student Loan Scheme you can borrow money from the government to help pay for your tertiary study, but you have to start paying the loan back once you earn over a certain amount.

Who can get a student loan

You can find out whether you qualify for a student loan on the StudyLink website.

Student loans are ‘unsecured’ loans, meaning you don’t have to provide an asset such as a house or car as security. They aren’t ‘means tested’, so what you or your parents earn or own doesn’t affect your ability to get a loan. 

However, if you are under 18 you’ll need to get your parents’ consent to get a student loan.

How much you can borrow

Tip: Only borrow what you need – the more you borrow the more you have to pay back.

There are three parts to a student loan. You don't have to borrow all three parts.

  • Compulsory fees – These pay all of your tuition fees. Fees are paid directly to your institution by StudyLink.
  • Course-related costs –  A lump sum for things like stationery, textbooks, childcare, travel or computer equipment. This is paid directly to your bank account.
  • Living costs – You can borrow up to a set amount each week for living expenses, which is then direct credited to your bank account. If you receive a student allowance this will reduce the amount you can borrow.

Visit the StudyLink website to find out the current payment limits for course-related costs  and living costs.

If you started a part-time course after January 2012, you will only be able to get the compulsory fees part of the student loan for that course, unless you have been granted ‘limited full-time’ status by StudyLink.

If you are aged 55 years and over you will only be eligible for the compulsory fees part of the student loan.

You won't be able to borrow for a student loan if you have student loan default of $500 or more when you apply, and that at least some part of that amount has been overdue for a year or more.

Student loan versus student allowance

The student allowance is a weekly payment for eligible students. Unlike a student loan, the allowance doesn’t have to be paid back.

If you receive the student allowance, the amount of student loan you can borrow for living costs goes down by the amount of student allowance you get after tax (not including the accommodation benefit payment).

Find out if you qualify for a student allowance on the StudyLink website.

What it costs

You'll need to pay an establishment fee every time you apply for a student loan from StudyLink, which is added to your loan. An annual administration fee will be charged on your loan if you have a balance of $20 or more with Inland Revenue at the end of the tax year, until you fully repay your loan.

If you live in New Zealand, your student loan is interest free. Find out more about student loans at the Inland Revenue website.

In most cases, if you live overseas for more than six months (184 days or more) you will be charged interest on your loan. Find out more about your student loan when you're travelling or living overseas at the Inland Revenue (IRD) website.

Paying back your student loan

Repayments from salary or wages

You need to start paying back your student loan once you earn over a certain amount every pay period. (This is called a ‘pay period repayment threshold’ and is based on the annual figure of $19,084.)

You need to use the ‘SL’ tax code. Your employer will make a student loan deduction from your salary or wages each pay period and pay this directly to Inland Revenue for you. 

However, if you’re working while you are a full-time student, you may qualify for an exemption from making repayments and from using the ‘SL’ tax code.

If you have more than one job, you may be able to apply for a reduced deduction rate on your student loan for your secondary job. You can apply for a repayment exemption or reduced deduction rate through Inland Revenue’s myIR online service.

You need to tell your employer if you have a loan, no matter how much you earn. It's important to use the correct tax code and have the correct repayments deducted from your pay.

The amount you have to repay (your repayment obligation) will generally be based on the pay period repayment threshold, for example, 12 cents for every dollar you earn over the weekly threshold if you’re paid every week.

Find out more about student loan repayments if you’re working in New Zealand for salary or wages.

Repayments from other income

If you receive income other than salary or wages in New Zealand (e.g. you are self-employed, have business or rental income, income from interest and dividends, and casual agricultural or election day work income) your repayment obligation will depend on how much your income is. You’ll be advised if you have a repayment obligation and the amount you need to pay towards your student loan.

Find out more about student loan repayments if you’re self-employed or earn other income.

Just paying back the minimum

You can pay back more than the minimum repayment amount at any time.

However, if your loan is interest-free, you won’t get any further into debt by paying only the minimum.  

Paying back more than the minimum

With most loans, the longer you have them the more interest you pay. Student loans are different because if you're living in New Zealand, you won't be paying interest.

But it’s important to remember:

  • Some people simply feel better if they don't have debt hanging over them. The sooner your loan is paid off, the sooner you'll get more money in your pay packet to keep for yourself.
  • If you go overseas for more than six months, in most cases you will pay interest, so your loan will increase.
  • It's possible that your student loan may affect your ability to borrow in the future. Different lenders may have different views on student loan debt.

If you want to pay off your loan faster, you can make extra repayments whenever you want to. You can pay Inland Revenue directly or ask your employer to make extra deductions from your salary or wages. 

Find out how to make extra repayments.

Work it all out

Work out how long it will take you to repay the loan and the difference voluntary repayments could make – try the student loan repayment calculator on the Inland Revenue website.

Student loans are binding

Only your death or bankruptcy writes off the loan. If you’re under 18, you need your parents’ consent to take out the loan but that doesn't mean they're guaranteeing your loan. You’re still fully responsible for paying it back. 

If you go overseas

Your loan doesn't go away if you leave the country. In fact, in most cases you’ll have to start paying interest if you leave the country for 184 or more consecutive days (about six months). You can find out more about travelling or living overseas at the Inland Revenue website.

To arrange for a repayment holiday (of up to one year) you need to apply to Inland Revenue. You need to apply either before you leave New Zealand or within the first 183 days of being overseas. You also need to provide the details of someone in New Zealand who’s agreed to be a contact person for you.

Repayment holidays don’t stop interest being charged on your loan though, so it’s still a good idea to make voluntary repayments to keep on top of things. It’s also a good idea to nominate someone to act on your behalf while you’re away.

Unless you are on a repayment holiday, you need to make student loan repayments while you’re overseas. These are based on your total loan balance and are generally due in two equal instalments on 30 September and 31 March.

You can pay these instalments either in a lump sum or by making smaller payments throughout the year, as long as the amount is paid in full by the payment dates above. There are late payment charges if you don’t pay on time.

Visit the Inland Revenue website for more information about making repayments when you are overseas.

Where to go for help