Student Loan Info - 2008

Student Loan Info Issue October 2008

• Student loan repayment threshold and interest rate
• Make sure you choose the right tax code
• Paying online now costs less
• Paying assessments on time
• How to make payments
• Your repayment obligations if you're overseas
• Overseas based borrowers-pay a little extra and repay your loan faster
• Keep in touch with your student loan online

Student loan repayment threshold and interest rate

If you earn more than $18,148 this year (1 April 2008 to 31 March 2009) you must make student loan repayments, regardless of whether you earn salary or wages or you're self-employed. If you're not eligible for an interest-free student loan, the interest rate this year is 6.7%.

See student loans for more details.

Make sure you choose the right tax code

If your student loan repayments become overdue, the overdue amount becomes subject to a compounding monthly penalty of 1.5% - which may increase the amount you owe significantly. The easiest way to avoid this happening is to check that you're using the correct tax code.

• If you're going to earn more than $18,148 (before tax) from your main source of income of salary or wages from 1 April 2008 to 31 March 2009, use the M SL tax code for that source of income from salary or wages.
• If you have other sources of income from salary or wages, use a secondary SL tax code for that source.

If you're not using the correct code, tell your employer straightaway and complete a new Tax code declaration (IR330) form. It's your responsibility to complete an IR330 form and choose the correct tax code each time you start a new job, or if your income or student loan situation changes. And you need to complete a separate IR330 for each source of income.

If you're not sure what tax code you should be on check out Tax rates and codes and use our Work out your tax code decision tree or call us on 0800 227 774.

If you earn a salary or wage and we identify that you're not on the right tax code, we'll write to your employer and ask them to change it. We'll send you a copy of the letter so you know what we're asking your employer to do. We're doing this to reduce the number of salary and wage earners getting into debt.

Paying online now costs less

If you use your Visa or Mastercard debit or credit card to make student loan payments through our website, you'll no longer have to pay the 2.49% bank fee. Since 1 July, we've been paying the fee for you, to make it more convenient to make online payments.

Paying assessments on time

It's important you make repayments by their due date to avoid the 1.5% monthly penalty on outstanding amounts.

If you have a student loan assessment to pay on 7 February 2009 and you don't think you'll be able to make the payment in one lump sum, here are some options to save you money in the long term.

• If you can afford to put enough aside each week to pay your assessment in full by 7 February, you can start making payments now. You don't need to contact us, just start making payments using one of the ways set out below.
• If it's getting close to 7 February and you realise you won't be able to make the payment in time, your best option is to call us on 0800 377 778 (+64 4 978 0779 from overseas) and set up a pre-emptive instalment arrangement. We'll negotiate a realistic, regular amount you'll be able to keep up with, and you can choose how you'll make those payments. A big benefit of negotiating an arrangement with us is that we may cancel some or all of the penalties for having overdue amounts-as long as you stick to the arrangement.

How to make payments

• Debit or credit card
• Electronic banking. If you're using this option it's important you use the correct codes or your payment may not end up where you want it to go. Select student loans (SLS) as the tax type and make sure the year reads 31 March 2008.
• Automatic payment. You can set up regular automatic payments through your bank or by downloading an IR586 automatic payment form from our website. If you don't have access to the internet we can send you a form or you can pick one up from any of our offices. Complete your details, making sure you have entered your correct IRD number, student loan (SLS) tax type and 31032008 as the period, then take the form to your bank.
• Manual payment at any branch of Westpac. Again, it's very important you use the right codes on your deposit slip - see above.

Your repayment obligations if you're overseas

If you have been overseas for more than six months your repayment obligations are different.

• If you're not on a repayment holiday you need to make two repayments a year-one by 30 September and the other by 31 March. The amount of each repayment is based on the size of your loan.
• If your application for the amnesty was accepted, you must meet your student loan amnesty repayment obligations. These are four six-monthly payments over two years, based on the size of your loan balance. Payments were due on 31 March 2008 and 30 September 2008. If you haven't paid these amounts, do it now or contact us to discuss a payment arrangement.

If you don't meet the provisions of your amnesty agreement an amnesty penalty will be added to your loan balance. This penalty will be the lesser of 5% of your total loan balance as at 31 March 2008 or the sum of your late payment penalties (as at 31 March 2008) which have already been reversed or not established as part of the fresh start.

Overseas based borrowers - pay a little extra and repay your loan faster

We've updated our online student loan calculator and it now includes the new rules for overseas-based borrowers. The calculator can help you plan your student loan repayments by showing you how much time (and interest) you can save by increasing your payments a little.

Keep in touch with your student loan online

Go to "Get it done online" to register for our online services. You can check your account balance, transaction details, earning information and due payments.

Go to student loans for more information about your student loan and interest-free student loans.

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Date published: 09 Oct 2008

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