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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.
- 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
- Adding "SL" to your tax code
- Excluding losses from calculating your repayment obligation
- Extra repayments through salary or wages
- New income types included when calculating your repayment obligation
- Pay period repayment obligations
- Pay period threshold for student loan deductions
- Reduced rates for secondary earnings
- Repayment exemptions for full-time students
- Repayment threshold until 2015
If you have a student loan and you're earning salary or wages in New Zealand, you must use tax codes that include the "SL" repayment code. That way you will make the right repayments towards 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.
If you have a loss from an investment or business activity, that loss won't reduce your income for calculating your adjusted net income for your student loan.
If you have separate business or investment activities which are normally carried out in association with each other, you can offset a loss from one business or investment activity against other like income.
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.
From 1 April 2014 you need to let us know if you receive other types of income or if your income’s changed, so we can work out your repayment obligation. This will ensure you’re paying the right amounts for your loan and you don’t end up falling behind on your repayments.
The income types used to calculate your student loan repayment obligation will be more closely aligned to those used to work out Working for Families Tax Credits entitlements.
If you're earning above the pay period repayment threshold in New Zealand, your student loan deductions (12 cents for every dollar earned over the threshold) every pay period 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 tax year. 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.
|If your pay period is ...||the repayment threshold is ...|
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).
You can apply for this exemption through your myIR Secure Online Services account.
The annual repayment threshold is $19,084.
- 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 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.
- Annual administration fee
- Applying for a repayment holiday
- Changes to repayment obligations for overseas-based borrowers
- Changes to late payment interest rate
- If you're significantly behind on your payments
- Information sharing with other government agencies
- 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 2014 there are changes to the overseas-based repayment obligations.
If you’re already overseas, your repayment obligation for the 2016 tax year (1 April 2015 - 31 March 2016) will be based on your loan balance as at 31 March 2015. If you left New Zealand after this date, your repayment obligation will be based on your loan balance on your date of departure. The following table shows what your full-year overseas-based repayment obligation will be:
|Loan balance||Repayment obligation|
your whole loan balance
|$1,000 and up to $15,000||
|over $15,000 and up to $30,000||
|over $30,000 and up to $45,000||
|over $45,000 and up to $60,000||
Your repayment obligation will be set as a minimum amount until your loan is repaid or you become New Zealand-based again. It will no longer decrease as your balance reduces. However, your repayment obligation will increase if your loan balance increases due to interest and the annual administration fee.
For the 2017 tax year (1 April 2016 - 31 March 2017), the late payment interest rate for student loan is 0.705% monthly. This rate varies each year, depending on the student loan interest rate.
If you enter into an instalment arrangement 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.
If you’re significantly behind on your repayment obligation and you haven’t talked to us recently about your loan repayments, you may be stopped from leaving New Zealand next time you come home for a visit.
If you are uncertain, or concerned that this may apply to you, you should contact us as soon as possible. We can work with you to arrange a repayment plan that will suit your situation and get you back on track with your loan.
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.
The Department of Internal Affairs also shares information with us from adult passport applications and renewals to help us contact overseas-based borrowers who are in default.
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.
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.
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