Student loans in New Zealand are provided by the Student Loan Scheme (SLS), introduced in New Zealand in 1992, which provides student loans and allowances for course fees, course-related costs, and living costs to tertiary students who meet StudyLink's funding criteria.Studylink. (n.d.). Eligibility Test. https://www.studylink.govt.nz/online-services/eligibility/index.html StudyLink is the public organisation under the Ministry for Social Development that is responsible for administering student loans and allowances.Studylink. (n.d.). How to pay for the study. https://www.studylink.govt.nz/starting-study/thinking-about-study/how-to-pay-for-study.html Eligibility criteria apply, and courses must be approved.
Repayment of student loans is required as soon as the income threshold of $22,828 (2024 tax year) is reached, this applies even if the borrower is still studying. Repayments are managed by the Inland Revenue Department (IRD), and information about the borrower's loans can be accessed through their myIR account. The loan repayment rate is 12% of every dollar over the income threshold, re-calculated at the start of the tax year.
Student loan eligibility criteria The maximum living cost payment that can be made is $302.32, students can borrow anything up to this amount.Studylink. (n.d.) Change living Costs. https://www.studylink.govt.nz/in-study/change-in-circumstances/living-costs.html The criteria for eligibility for a student loan are as follows:
Residency Criteria
The student must be a New Zealand citizen, or ordinarily resident in New Zealand and have: lived in New Zealand for at least 3 years and held a residence class visa for at least 3 years.Studylink. (n.d.). Student Loan Eligibility. https://www.studylink.govt.nz/products/a-z-products/student-loan/index.html#studentloaneligibility
There are exceptions to the residency criteria: where the student is a refugee or protected person or their immediate family, an Afghan evacuee, or a Christchurch Response Visa.Studylink. (n.d.). Residency Requirements. https://www.studylink.govt.nz/about-studylink/glossary/residency-requirements.html
Approved Courses
One must study a course approved by the Tertiary Education Commission for Student Allowances and Student Loans.Studylink. (n.d.). Approved Study Course Programme. https://www.studylink.govt.nz/about-studylink/glossary/approved-study-course-programme.html Student Allowance approved courses must be an undergraduate course (level 7 or below on the National Qualifications Framework) or a bachelor's degree with Honours.Studylink. (n.d.). Approved Study Course Programme. https://www.studylink.govt.nz/about-studylink/glossary/approved-study-course-programme.html Student Loan must be studied full-time; part-time and 32 weeks or more; or part-time, less than 32 weeks and with at least 0.25 EFTS.
Returning Students
Returning students are subject to additional requirements. If a student has completed 1.6 EFTS they must have passed at least half of the courses undertaken in the past five years to be eligible for a student loan.Studylink. (n.d.). Return to Study. https://www.studylink.govt.nz/return-to-study/pass-course/passed-half-course.html
Student allowance eligibility criteria The ability to claim course fees, course-related costs, and living costs under a student allowance depends on the student and the student's parents' income.Studylink. (n.d.). Student Allowance. https://www.studylink.govt.nz/products/a-z-products/student-allowance/index.html While a student is younger than 24, their parent's income and bereaved parents are relevant factors; however, once they are older than 24 this will no longer be considered. A student can earn up to $240.70 per week before proportionate deductions are made from their student allowance. If a student has a partner and is over 24 or is supporting a child, their student allowance eligibility will be further affected. There is an eligibility calculator for students to assess their allowance eligibility.
Administration fee: A $60 establishment fee is charged each time a student opens a loan account, which will be good for 52 weeks.Studylink. (2015). What is a Student Loan. Ministry of Social Development.
Loan composition The student loan comprises three parts: Compulsory fees – cover tuition fees and various levies. These are paid to the tertiary institution directly. Course-related costs – helps cover costs of items necessary to complete study.Whitireia & WelTec - Course-related Costs. (n.d.). Whitireia and WelTec. Retrieved April 11, 2023, from https://www.whitireiaweltec.ac.nz/enrolment-information/enrolment-process/course-related-costs/#:~:text=Course%2Drelated%20costs%20are%20items Including stationery, textbooks, equipment, tools, technology and voluntary student association fees. The borrower is allowed up to $1000 per year in course-related fees, which they can claim over the year. These are paid into the borrower's bank account. To receive the payment a student must be under 55 and studying full-time.MSD. (n.d.-b). Student Loan course-related costs - StudyLink. Www.studylink.govt.nz; MSD. Retrieved April 11, 2023, from https://www.studylink.govt.nz/products/a-z-products/student-loan/course-related-costs.html Living costs – helps cover day-to-day living expenses. Including, but not limited to, food, rent, bills, services and transport.MSD. (n.d.). Help to work out how much it could cost to live - StudyLink. Www.studylink.govt.nz; MSD. https://www.studylink.govt.nz/starting-study/thinking-about-study/cost-of-living.html As of 1 April 2023, the maximum payment for living costs is $302.32 per week, plus any student allowance received. This figure is adjusted every year in April to account for inflation. Students can only receive the living costs payment if they are studying full-time and under 55.MSD. (n.d.-c). Student Loan living costs - StudyLink. Www.studylink.govt.nz; MSD. https://www.studylink.govt.nz/products/a-z-products/student-loan/living-costs.html Students who are on a Work and Income benefit cannot receive the loan to cover their weekly living costs.MSD. (n.d.-b). On a benefit - StudyLink. Www.studylink.govt.nz; MSD. https://www.studylink.govt.nz/starting-study/whats-available/on-a-benefit.html
New loans There is a debt eligibility check for new loan applications. It is not possible to borrow through the Student Loan Scheme if the student has $500 or more in default at the time of your application and 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 on or after 7 February 2013 and includes all unpaid repayment obligations, late payment interest, penalties, and amounts under installment arrangement.
Repayment Repayment of student loans taken in New Zealand is required as soon as the income threshold of $22,828 (2024 tax year) is met by the borrower, this applies even if the borrower is still studying.Studylink. (n.d). Student Loan – Your obligations. https://www.studylink.govt.nz/in-study/study-details/student-loan-obligations.html Repayments are managed by the Inland Revenue Department (IRD) and important information about loans, such as checking loan balances and requesting reduced loan repayments can be accessed through the borrower's account.Inland Revenue. (2022). I am having difficulty repaying my student loan. https://www.ird.govt.nz/student-loans/tracking-my-student-loan-balance/difficulty-repaying-student-loan) The loan repayment rate is 12% of every dollar over the income threshold.Inland Revenue. (2023). Repaying my student loan when I earn a salary or wages. https://www.ird.govt.nz/student-loans/living-in-new-zealand-with-a-student-loan/repaying-my-student-loan-when-i-earn-salary-or-wages This threshold is re-calculated at the start of the tax year to account for changing living costs.
For borrowers who are New Zealand-based, loans are interest-free and are automatically deducted out of salary or wages along with tax through the addition of "SL" to the borrower's tax code. If the borrower does not correctly add the "SL" to their tax code, the IRD will contact the borrower's employer to ensure this is updated and additional deductions will be taken from the salary or wages of the individual to catch up on the repayments.Inland Revenue. (2021). Student loan underpayments. https://www.ird.govt.nz/student-loans/living-in-new-zealand-with-a-student-loan/repaying-my-student-loan-when-i-earn-salary-or-wages/student-loan-underpayments If a borrower is self-employed or has any other taxable source of income that amounts to greater than the repayment threshold, they must advise the IRD so the amount repayable can be calculated.Studylink. (n.d). What happens to your loan. https://www.studylink.govt.nz/finished-study/your-loan.html While student loans remain interest-free for as long as the borrower is living in New Zealand if repayments are not made on time, late payment interest can be charged on the overdue amount at 6.8%.Inland Revenue. (2023). Student loan interest and fees. https://www.ird.govt.nz/student-loans/tracking-my-student-loan-balance/student-loan-interest-and-fees If a borrower is having difficulties meeting the repayment requirements, the IRD may offer repayment options,Ministry of Business, Innovation and Employment. (n.d). Paying back student loans when you’re self-employed. https://www.business.govt.nz/news/student-loans-self-employed/#:~:text=If%20you%20have%20a%20student,on%20your%20adjusted%20net%20income as well as offering a reduced late payment interest rate, if the borrower contacts the IRD about the late payments, at a rate of 4.9%.
When borrowers leave New Zealand for longer than 6 months, interest is added to their loan at a rate of 4.9%. Repayment amounts are sent to the borrower biannually and the amount to be paid is initially calculated based on the loan balance when the borrower left the country, further repayment amounts are calculated based on the loan balance at the end of every tax year that the borrower remains overseas.Inland Revenue. (2022). Repaying my student loan when I live overseas. https://www.ird.govt.nz/student-loans/living-overseas-with-a-student-loan/repaying-my-student-loan-when-i-live-overseas Loan repayments can be suspended on request for those on no/low income overseas, however, interest still accumulates.Inland Revenue. (2021). Temporary repayment suspension for student loans. https://www.ird.govt.nz/student-loans/moving-overseas-or-returning-to-new-zealand/i-am-moving-overseas/temporary-repayment-suspension-for-student-loans
For borrowers in New Zealand with more than one job, applying for a student loan special deduction rate for secondary earnings is possible if the student earns less than the pay period repayment threshold from one's main job.Inland Revenue (2022). I am having difficulty repaying my student loan. https://www.ird.govt.nz/student-loans/tracking-my-student-loan-balance/difficulty-repaying-student-loan
Student loans are written off if the borrower dies; their estate is only obliged to pay any outstanding loan repayments up to the date of the borrower's death.Studylink. (n.d). Death of a student. https://www.studylink.govt.nz/about-studylink/services/death-of-a-student.html
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