Paying back a student loan
Student loan repayments from salary or wages
You need to start paying back your student loan once you earn over a certain amount every pay period. (This is called a ‘pay period repayment threshold’ and is based on the annual figure of $19,136.)
You need to use the ‘SL’ tax code. Your employer will make a student loan deduction from your salary or wages each pay period and pay this directly to Inland Revenue for you.
However, if you’re working while studying full time, you may qualify for an exemption from making student loan repayments and from using the ‘SL’ tax code.
If you have more than one job, you may be able to apply for a reduced deduction rate on your student loan for your secondary job. Apply for a repayment exemption or reduced deduction rate through Inland Revenue’s myIR online service.
You need to tell your employer if you have a student loan, no matter how much you earn. It's important to use the correct tax code and have the correct student loan repayments deducted from your pay.
The amount you have to repay (your repayment obligation) will generally be based on the pay period repayment threshold. For example, the student loan repayment rate is 12 cents for every dollar you earn over the weekly threshold if you’re paid every week.
Find out more about student loan repayments if working in New Zealand for salary or wages.
Student loan repayments from other income
If you receive income other than salary or wages in New Zealand (e.g. you are self-employed, have business or rental income, income from interest and dividends, and casual agricultural or election day work income) your student loan repayment obligation will depend on how much your income is. You’ll be advised if you have a student loan repayment obligation and the amount you need to pay towards your loan.
Find out more about student loan repayments if self-employed or earning other income.
Paying back more than the minimum
You can pay back more than the minimum repayment amount at any time.
If your student loan is interest-free, you won’t get any further into debt by paying only the minimum.
It may pay to pay it off faster
With most loans, the longer we have them the more interest we pay. Student loans are different because if we're living in New Zealand, we won't be paying interest.
But it’s important to remember:
- Some of us just feel better without debt hanging over our heads! The sooner our student loan is paid off, the sooner we’ll get more money in our pay packet to keep for ourselves.
- If we go overseas for more than six months, in most cases we will pay interest, so our loan will increase.
- It's possible that our student loan may affect our ability to borrow in the future. Different lenders may have different views on student loan debt.
Want to pay off a student loan faster? We can make extra student loan repayments at any time to Inland Revenue directly or by asking our employer to make extra deductions from our salary or wages.
Find out how to make extra repayments.
Work it all out
Work out how long it will take to repay the loan and the difference voluntary repayments could make – try the student loan repayment calculator on the Inland Revenue website.
Student loans are binding
Only our death or bankruptcy writes off a student loan. If under 18, we need our parents’ consent to take out the loan but that doesn't mean they're guaranteeing our loan. We’re still fully responsible for paying it back.
Withdrawing from study
If we withdraw from study before our tertiary education provider's official withdrawal deadline, any refund for fees paid will be passed to StudyLink to reduce our student loan balance. If we withdraw after that deadline passes and do not qualify for a refund, we will still need to repay our student loan even if we don't complete the course.