The Student Loan Scheme is available to students studying at tertiary level (after secondary school). This helps towards the cost of studies, books and living expenses.
The three organisations involved in the Student Loan Scheme are:
- the Ministry of Education, which advises the Government about student loan policies
- StudyLink (a service of the Ministry of Social Development), which processes loan applications and manages student loan accounts in the year the money is borrowed
- Inland Revenue, which manages the loan accounts after each year of study and collects student loan repayments when you start to earn over the repayment threshold.
To get a student loan you need to be enrolled in an approved qualification at a tertiary institution, recognised by the Minister of Education. You must also be 18 years or older (if you are under 18 years, you need a parent's consent). You need to be a New Zealand citizen, a permanent resident, or a refugee entitled to live in New Zealand indefinitely.
The amount you get depends on:
- the type of tertiary institution you are studying at
- how much your fees are
- whether you are studying full or part-time
- the duration of your study programme
- whether you receive a student allowance (for living costs)
- whether you or your partner get a benefit
A student loan has four parts: compulsory fees; course-related costs; living costs; and a $50 administration fee.
A student loan is a debt and you must:
- pay back any money you borrow, including interest, which is currently 6.8 percent if you are living overseas. If you decide to take out a student loan, it is wise to borrow only the amount you need for your studies.
- start repaying your loan at the rate of 10 cents per dollar earned over $19,084. If you think you will earn more than this from your main job between 1 April 2009 and 31 March 2010, you must tell your employer you have a student loan and use the M SL tax code.
You can save money by making additional payments at any time and for any amount. You can do this even if you are earning under the repayment threshold, or you can simply make additional repayments above the amount you are required to pay.
Interest-free student loans
From 1 April 2006, student loans for borrowersl iving in New Zealand for 183 or more consecutive days (183-day requirement) are interest free. Interest will continue to be charged to your loan but, if you are eligible, this interest will be written off automatically after the end of each tax year (31 March).
If you do not meet the 183-day requirement for an interest-free student loan, you may qualify for an exemption or other interest write-offs. You must meet certain conditions and provide proof to support your application for an exemption.
The first interest-free student loan write-offs will occur after 31 March 2007.
For more information, visit the Interest-free student loans and other interest write-offs, IR222 section on the IRD website.
Absence overseas
If you are planning to travel overseas, you must let Inland Revenue know before you leave. The IRD will need a contact address, either overseas or in New Zealand, so it can send you notices and statements.
