Guide to student loans: Student loan glossary
Student loan glossary
Adjusted net income - applies from 1 April 2012
Adjusted net income for a borrower who has other income means their annual gross income, not including salary or wages, less annual total deductions that may be claimed.
If a borrower has a loss from an investment or business activity, neither the income or the deductions from that activity are included in calculating adjusted net income. If a borrower has separate business or investment activities which are normally carried out in association with each other, a loss from one business or investment activity can be offset against other like income.
Administration fee
An annual fee charged to cover the cost of administering a borrower's loan account.
Annual repayment threshold
The annual amount a New Zealand-based borrower may earn in a tax year before they have a repayment obligation.
Repayments for borrowers earning salary or wages are based on the pay period repayment threshold.
Annual total deductions
Expenses and deductions that can be claimed for the tax year.
Extra deductions
Extra deductions are in addition to standard student loan repayment deductions an employer makes from a borrower's salary or wages.
Extra deductions may be voluntary (when a borrower asks their employer to deduct an extra amount from their salary or wages) or compulsory (when we instruct an employer to deduct an extra amount to recover significant under-deductions from a borrower's salary or wages).
Extra repayments
See voluntary repayments.
Interest-free
Student loans for New Zealand based borrowers (including those borrowers treated as being New Zealand-based) are interest-free. Interest charged is written off.
Interest charged while a borrower is overseas-based is not written off.
Interim payment
Payments a borrower must make during the year towards a pre-taxed or other income repayment obligation.
Late payment penalties/late payment interest
Late payment penalties or late payment interest may be charged on unpaid amounts
Note
Late payment penalties are charged up to 31 March 2012 and late payment interest is charged from 1 April 2012.
Charges are added to the unpaid amount from the day after the due date, and then monthly until the total amount, including the late payment charges, are paid in full.
Loan advance
The money StudyLink makes available to a borrower under the Student Loan Scheme. It covers establishment fees and any other charges associated with a loan contract.
Net income - tax years 2012 and prior
A borrower's gross income (before tax), less expenses and deductions incurred in the tax year.
Net pre-taxed income - applies from 1 April 2012
A borrower's pre-taxed income less allowable expenses.
If a borrower has a loss from an investment activity, neither the income or the deductions from that activity are included in net pre-taxed income. If a borrower has separate investment activities which are normally carried out in association with each other a loss from one activity can be offset against the other.
New Zealand-based borrower
A person is a New Zealand-based borrower if they have been living in New Zealand for 183 or more consecutive days or have approval to be treated as New Zealand based while overseas. New Zealand based- borrowers' loans are interest-free.
If an overseas-based borrower returns to New Zealand, they'll become a New Zealand-based borrower when they've been back in the country for 183 consecutive days. They can leave New Zealand for up to 31 days during this period and still qualify as New Zealand-based. If they're absent for 32 or more days, a new 183-day period will start as soon as the borrower returns to New Zealand. Once a borrower has met this 183 day rule, they are treated as New Zealand-based from the first day of the 183 day period.
Overseas-based borrower
An overseas-based borrower is someone who has been overseas for 184 or more consecutive days (about six months). They become an overseas-based borrower from the day after leaving New Zealand.
Overseas-based borrowers have different repayment obligations and their loan is no longer interest free.
Other income
Other income is income earned or received from sources that generally don't already have tax or student loan repayments deducted from it.
Overseas-based repayment obligation
A repayment obligation for an overseas-based borrower, based on their total loan balance.
Pay period repayment threshold
The set amount which can be earned in a pay period before student loan repayments need to be made from salary or wages for borrowers using a main job tax and repayment code. Borrowers who earn over the pay period repayment threshold have 10 cents in each dollar above the threshold deducted for their student loan.
The pay period repayment threshold is based on the annual repayment threshold (eg, if a borrower is paid weekly, the annual repayment threshold is divided by 52 weeks).
Pre-taxed income
Pre-taxed income is income earned or received from specific sources that has generally already had tax deducted from it (ie, PAYE, RWT etc) but has not had any student loan deductions.
Repayment deduction exemption
An exemption for New Zealand-based borrowers in full-time study and working that means they don't need to:
- use the "SL" repayment code
- have student loan repayment deducted from their salary or wages.
Repayment holiday
A period of up to 365 days during which borrowers don't have an overseas-based repayment obligation to pay. Borrowers need to apply for a repayment holiday.
Note
Interest is still charged during a repayment holiday.
Remaining repayment
A remaining repayment is calculated once the end of year square-up from an Individual tax return (IR3) or a personal tax summary has occurred. A borrower must pay it to meet their pre-taxed or other income repayment obligation for a tax year. Remaining repayments apply from the 2013 tax year onwards.
Repayment obligation
The minimum amount a borrower must pay towards their student loan.
Repayment obligations for New Zealand-based borrowers are based on income. Overseas-based borrowers' repayment obligations are based on their total loan balance.
Significant over-deduction
When the student loan deduction from a borrower's salary or wages is more than needed to meet their pay period repayment obligation and the amount exceeds the threshold we have determined.
Significant under-deduction
When the student loan deduction from a borrower's salary or wages is less than needed to meet their pay period repayment obligation and the amount exceeds the threshold we have determined.
Special deduction rate
A borrower can apply for a special deduction rate to reduce the amount of student loan deductions that would normally be required from their salary or wages income.
Unpaid amount
All or part of a repayment obligation not paid by its due date and/or any late payment penalties and/or late payment interest charged.
Voluntary repayments
Extra repayments made on top of a borrower's repayment obligation for a tax year. They can be either a single lump sum or smaller amounts paid throughout the year. Extra repayments include voluntary extra deductions a borrower makes from their salary or wages.
Voluntary repayments may count towards a voluntary repayment bonus.
Voluntary repayment bonus
A 10% bonus for making extra (voluntary) repayments that total $500 or more in a tax year (1 April to 31 March). A voluntary repayment bonus reduces a borrower's loan balance.
Compulsory extra deductions and standard repayment deductions made from a borrower's salary or wages don't count towards a voluntary repayment bonus.
Date published: 10 Apr 2012
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