Student Loan Info - 2007

Student Loan Info Issue May 2007

• Are you based overseas or planning to travel overseas in the future?
• Repayment holiday for overseas-based borrowers
• Repayment obligations for overseas-based borrowers
• Amnesty on late payment penalties
• Other key changes for all borrowers
• Interest-free student loans and your statement of account

It's a great time to check-in on your student loan

Are you based overseas or planning to travel overseas in the future?

Changes have been made to student loans, making it easier for you to stay on top of your loan while you're away.

You'll find an outline of all the changes and how they might benefit you here.  For more information go to student loans.

Repayment holiday for overseas-based borrowers

A repayment holiday of up to three years has been introduced for overseas-based student loan borrowers. This means that while you're on a repayment holiday you don't have to make any compulsory repayments. Interest will continue to be charged on your student loan (the current interest rate is 6.8%), so it's a good idea to make voluntary repayments to reduce your loan balance.

If you go overseas after 1 April 2007 you'll receive a three-year repayment holiday automatically.

If you were overseas as at 1 April 2007 and have kept up to date with your repayment obligations, or have been overseas for less than one year, you'll also automatically receive a three-year repayment holiday. Your repayment holiday will be effective from 1 April 2007 and, while you are on it, you will not receive a notice of assessment, starting with the 2008 period.

For all other borrowers who are overseas as at 1 April 2007, your entitlement to a repayment holiday depends on the length of time you have been overseas and if you have kept up to date with your repayment obligations.

You can choose to stop and restart your repayment holiday any time, up to the total amount of your entitlement.

Repayment obligations for overseas-based borrowers

If you are not on a repayment holiday, your overseas-based repayment obligations will be:

Repayments on your student loan while you're based overseas are now required twice a year instead of quarterly. The due dates are 30 September and 31 March.

Amnesty on late payment penalties

The amnesty on student loan late payment penalties has been extended until 31 March 2008.

The amnesty offers you the chance of a fresh start if you have fallen behind in your payments. If you're eligible for the amnesty, we'll reverse all of your late payment penalties.

To be eligible you need to have been either:

• a non-resident for tax purposes on 31 March 2006 and had late payment penalties as at 1 April 2007,or
• overseas as at 31 March 2006 but haven't advised us that you've left New Zealand.

You need to apply for the amnesty before 31 March 2008 to avoid a one-off penalty being applied to your loan balance. The penalty will be either 5% of your total loan balance or the sum of your original late payment penalties, whichever is lower.

As part of your application, you will need to agree to keep up with your repayments for two years. Once you've met your repayment obligations you will also be entitled to apply for a three-year repayment holiday.

To apply for the amnesty complete the online application form before 31 March 2008. Go to Get it done online >

Other key changes for all borrowers

Effective as at 1 April 2007:

• The rules that determine which repayment regime applies to you have been made a whole lot simpler. From 1 April 2007:
  • If you are eligible for an interest-free student loan, you are considered to be a New Zealand-based borrower and need to repay your loan based on whether you earn a salary or wage, or are self-employed.
  • If you are not eligible for an interest-free student loan, you are considered to be an overseas-based borrower and need to repay your loan according to the repayment obligations for overseas based borrowers.
• The late payment penalty rate has been reduced from 2% to 1.5% for all borrowers who fail to meet their repayment obligations.
• An information match between Inland Revenue and the New Zealand Customs Service has been introduced. This will help us to determine whether student loan borrowers are based in New Zealand or overseas. If you are going overseas for more than six months, however, you are still legally required to let Inland Revenue know.
• Other interest write-offs (including full interest, base interest write-offs and interest reductions) for borrowers not eligible for an interest free student loan have been removed. However, if you think you may be entitled to these write-offs for tax years prior to and including 2007 you can still apply.
• Borrowers studying full-time overseas at an undergraduate level (level 7 on the New Zealand Register of Quality Assured Qualifications) may now be eligible for an exemption to the 183-day requirement for interest-free student loans.

For more information go to student loans.

Interest-free student loans and your statement of account

If you are eligible for an interest-free student loan, we have written off the interest charged from the first day of your 183-day qualifying period.

Your interest-free write-offs appear on the last page of your statement under "Statement of Your Account Activity".

To ensure that you have the correct amount of interest written off, we have recalculated your interest. These adjustments also appear under "Statement of Your Account Activity".

Download ›

PDF | 103kb | 2 pages

Download Acrobat Reader to view PDF files

Report an accessibility problem for this page

Other issues this year

Student Loan Info Issue October 2007

Date published: 23 Aug 2007

Back to top