Things you need to know about student loans
Here are the things you need to keep in mind to make sure you’re getting it right when it comes to your student loan.
From 1 April 2013, the repayment rate for student loan deductions increases from 10% to 12%.
Other changes to student loans introduced last year now make it easier for you to manage and repay your student loan, whether you’re in New Zealand or overseas.
Go straight to the section that relates to you by selecting the links below:
- If you're earning New Zealand salary or wages or income from other sources
- If you're taking out a new student loan in New Zealand
- For all student loan borrowers in New Zealand and overseas
In this section find out about:
- Adding "SL" to your tax code
- Excluding losses from calculating your repayment obligation
- Extra repayments through salary or wages
- Pay period repayment obligations
- Pay period threshold for student loan deductions for 2014 tax year
- Reduced rates for secondary earnings
- Repayment exemptions for full-time students
- Repayment threshold until 2015
If you have a student loan and are earning salary or wages in New Zealand, you need to add "SL" to your tax code regardless of how much you earn, unless you have an exemption. This will ensure you're making the right repayments toward your student loan through your pay.
You won't be able to use losses from your business or investment activities to offset your income and reduce your student loan repayment obligation.
You can ask your employer to make extra student loan repayments through your salary or wages. Just let them know how much extra you want to pay and your employer will send us your extra repayments along with your standard student loan deductions each month.
If you're earning above the pay period repayment threshold in New Zealand, your student loan deductions every pay period from 1 April 2012 will be considered as meeting your repayment obligation on your salary or wage income, unless there's a significant over- or under-deduction.
You'll no longer have an end-of-year repayment obligation, which means you'll no longer get a student loan bill or refund at the end of the 2013 and future tax years. However, we'll check your pay details to make sure your deductions are correct.
- If there's a significant under-deduction, we can require you to have compulsory extra deductions made through your employer to recover the amount.
- For significant over-deductions, you can either request a refund or have this applied to your loan balance, provided you don't have unpaid student loan amounts.
If you have income from other sources such as interest, dividends, rental or business income, you may still be required to have an end-of-year repayment obligation.
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For borrowers in New Zealand with more than one job, you can apply for a student loan special deduction rate for your secondary earnings if you earn less than the pay period repayment threshold from your main job. You can apply for a reduced rate through your myIR Secure Online Services account. This ensures you're paying the right amount toward your student loan.
If you're studying full-time and working, you can apply for a repayment deduction exemption. This means you don't have to use tax codes with "SL" and you won't have student loan deductions from your pay. To qualify you need to be studying full-time in New Zealand and expect to earn less than the annual repayment threshold ($19,084 for the 2013 and 2014 tax years).
You can apply for this exemption through your myIR Secure Online Services account.
The annual repayment threshold will remain at $19,084 until 31 March 2015.
In this section find out about:
- Alternative contact person for new student loan applications
- Debt eligibility check for new loan applications
When you apply for a new student loan, you need to provide an alternative contact person who lives in New Zealand. Your contact person is not responsible for your loan repayments. We may get in touch with your contact person to ask for your updated contact details if you have an overdue repayment and we've been unable to contact you.
You won't be able to borrow through the Student Loan Scheme if you have $500 or more in default at the time of your application, and that at least some portion of that amount has been overdue for a year or more. This applies to all new student loan applications received by StudyLink on or after 7 February 2013 and includes all unpaid repayment obligations, late payment interest, penalties and amounts under instalment arrangement.
If you do not meet the $500 debt eligibility check, you need to make repayments to us to reduce the amount in default and make you eligible for a student loan. StudyLink will confirm with us whether your amount in default, if any, is under $500 with every new student loan application.
In this section find out about:
- Annual administration fee
- Applying for a repayment holiday
- Changes to late payment interest rate
- Information matching with New Zealand Customs
- Recalling the entire loan amount
- Removal of voluntary repayment bonus
- View all your loan information on one site
An annual administration fee of $40 will be charged to your account if you have a student loan balance of $20 or more, unless you have been charged StudyLink's establishment fee in the same year.
You can apply for a repayment holiday for up to the first year (365 days) of being overseas. You need to apply for the repayment holiday either before you leave New Zealand or within the first 183 days of being overseas, and to provide an alternative contact person based in New Zealand.
You can apply for a repayment holiday through your myIR Secure Online Services account.
From 1 April 2013, the late payment interest (formerly late payment penalty) rate for student loan reduces from 0.843% to 0.789% monthly. This rate will vary each year, depending on the student loan interest rate.
If you enter into an instalment arrangement from 1 April 2013 for overdue or upcoming student loan amounts, you will be entitled to a reduced late payment interest for each month you keep to the arrangement.
We match information with New Zealand Customs so we’re notified when student loan borrowers who have fallen behind on their repayments are travelling to New Zealand. We use this information to contact the borrower to discuss their student loan and make arrangements to repay their loan arrears, or pursue other collection processes.
Recalling the entire loan amount
For borrowers who have consistently been non-compliant with their repayment obligation, we can demand full repayment of a student loan, whether or not the entire amount is outstanding.
The voluntary repayment bonus is no longer available. Any extra repayments made for student loan obligations for the 2010 to 2013 tax years (1 April 2009 - 31 March 2013) may still qualify for the bonus. Extra repayments made from 1 April 2013 for obligations for the 2014 tax year onwards will no longer qualify for the bonus. However, these additional repayments will still help you pay off your student loan faster.
If you're currently studying, you're now able to see a complete and up-to-date view of your loan balance including StudyLink transactions through your myIR Secure Online Services account - you need to be registered for this service.
StudyLink transfers loan account information to us on a daily basis. This means the statements you'll receive from us will also include your StudyLink transactions so whether it's online or on paper, you will see your total loan balance every time.
Back to Guide to student loans
Date published: 08 May 2013
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