All applications for Student Loans are dealt with by StudyLink, which is part of the Ministry of Social Development. For information on how to apply, visit www.studylink.govt.nz.
Repayment of student loans is dealt with by the Inland Revenue Department (www.ird.govt.nz/studentloans), not StudyLink.
You’ll qualify if you meet these conditions –
A Student Loan has three different components –
After you’ve applied for your loan and StudyLink has accepted your application, you will need to sign a loan contract with the Government. This is a legal contract, which legally binds you to pay back the loan with interest.
Under the contract you also agree to keep up to date the information that StudyLink has about you (for example, your contact details).
If you’re under 18, one of your parents or a caregiver will also have to sign your loan contract. This doesn’t make them responsible for repaying any of your loan – you are still responsible for it.
A person who is under 18 is legally bound by a Student Loan contract just the same as someone who is 18 or older. This is different from the usual laws that cover under-18s and contracts – usually if you’re under 18 you aren’t legally bound by a contract unless the other party can show that the contract is fair and reasonable.
You will have to make repayments on the amount you borrowed once you start earning over a certain amount (the repayment threshold). To find out the current repayment threshold, visit the Inland Revenue website at www.ird.govt.nz/studentloans. The threshold is reviewed in April each year.
Repayments are made by your employer making deductions from your wages or salary and paying them to Inland Revenue. A proportion of everything you earn over the repayment threshold is deducted.
You can also make voluntary repayments at any time.
From 1 April 2006, your Student Loan is interest-free if you are living in New Zealand.
This full interest write-off applies whether or not you’re studying and whether or not you graduated with a qualification.
The write-off applies both to existing borrowers as at 1 April 2006, and to new borrowers who take out loans after that date. However, only interest accrued after 1 April 2006 is written off; the write-off does not affect interest charged before that date.
To qualify, you must have lived in New Zealand for 183 or more consecutive days. You can, however, travel overseas for up to 31 days in total during the 183-day qualifying period; in that case, the time spent overseas is treated as if you remained living in New Zealand. If during a 183-day period of living overseas you returned to New Zealand for less than 31 days, that time in New Zealand is treated as if you remained overseas.
You don’t need to do anything to get the interest write-off. Interest continues to be charged to your student loan account during the tax year, but is then automatically written off at the start of the next tax year. The first write-off therefore occurs on 1 April 2007.
If you don’t qualify for this full interest write-off, you may qualify for one of the other interest write-offs and reductions explained below. Those other write-offs and reductions existed before 1 April 2006 and continue to be available.
It’s also possible to get an exemption from the 183-day requirement in certain cases – for example, if you’re doing full-time postgraduate study overseas or working overseas for the NZ Government. For more information on exemptions and how to apply for them, contact Inland Revenue.
Interest on your Student Loan is written off for a given year if –
For more details, see the IRD website at www.ird.govt.nz/studentloans.
While you’re earning under the repayment threshold, you’ll qualify to have part of your interest written off.
The part that’s written off is the "base interest rate", which covers the cost to the Government of the Student Loan scheme. The other part of the interest rate is the "interest adjustment rate", which depends on the rate of inflation from the previous year. When the base interest rate is written off, this means that your loan balance rises only by the rate of inflation. For more details, see the IRD website at www.ird.govt.nz/studentloans.
You’ll need to be a New Zealand resident for tax purposes to get this partial interest write-off.
If the base interest you’ve accrued is more than 50 percent of your repayment obligation, the base interest that is over that 50 percent mark is written off.
From 1 April 2006, a base interest write-off or a base interest reduction can only be granted for a maximum of two years.
From April 1, 2007, a new "repayment holiday" of three years for borrowers going overseas has been introduced. Borrowers will not have to make payments during this holiday, although their loans will still attract interest.
The late-payment penalty for borrowers living overseas and in New Zealand will reduce from 2 percent a month to 1.5 percent per month.
There is an amnesty on late payment penalties for borrowers who were non-resident in New Zealand on 31 March 2006. The amnesty runs from 1 April 2006 to 31 March 2008.
You may also qualify for other Government assistance targeted at students. Visit www.studylink.govt.nz to find out whether you qualify for –
You may also qualify for other Government income support – such as a Community Services Card, Family Support or a Disability Allowance. To find out if you qualify, visit Work and Income’s website at www.workandincome.govt.nz.