New To NZ Student Loans? Here's Your Complete Guide

Learn how student loans really work in New Zealand, and how this can affect your future plans and goals.

Getting into a good college is just the start. Next up is reassessing your funds (or usually, that of your parents') to see if you can afford all the college expenses. If you think you're gonna be short, you can always go for a student loan. 

There's no denying that taking on this debt can be daunting, but if it means helping you get through college and land your dream career, it's totally worth considering. That's also why it's important to do proper research before getting one to get an idea on which option will work best for you.

What is a Student Loan?

Apart from scholarships, grants, and work-study programs, a student loan is another option for many learners to fund their education. A Student Loan is money borrowed from the government to help students pay for college expenses, including tuition, course fees, study materials, dorm fees, and more. The loan has to be paid back later on with interest.

In New Zealand, you can borrow through the Student Loan Scheme with no interest!

Who is eligible for a Student Loan?

You're qualified for a Student Loan in New Zealand if:

• you're a New Zealand citizen
• have been living in New Zealand for at least three (3) years
• a refugee/protected person
• is sponsored into New Zealand by someone in your family who, at the time you were sponsored, was a refugee or protected person

If you're under 18, you will need your parent's consent to get one.

Note: You can be eligible to get fees-free study if you're a new student.

How and when can I apply for a Student Loan?

You can apply for a student loan online through the StudyLink website even if you haven't decided where or what you're studying yet. And while you also have the option to apply after your course starts, it's advisable to apply as early as you can to help get your correct payments on time.

There are also different steps to take depending on whether you're applying for the first time, applying when you've had a Student Loan more than a year ago, and if you're applying as a returning student.

How much can I borrow?

There are three student loan options in NZ. Students don't necessarily have to borrow all three.

• Compulsory fees: This is what you use to pay for your tuition fees. The number of compulsory course fees will depend on how many EFTS (Equivalent Full-time Student) your course is. The maximum you can get is $35,000 per 1 EFTS.
• Course-related costs: This is used mainly for study materials like textbooks, stationery, and computers. If approved, you can borrow up to $1000 in course-related costs.
• Living costs: You can borrow a specific amount each week (up to $239.76) for your day-to-day living expenses.

I applied for a Student Loan. What happens next?

If approved, you'll receive a Student Loan contract, which you will have to return together with any documents they request from you. After that, they'll confirm your enrollment details with your chosen school before you start your course. You must be fully enrolled before they can do this.

How do I pay my Student Loan?

If you're a student in New Zealand, paying your student loan will be based on what type of income you have:

• salary or wage income
• self-employed income
• others (trust income, overseas income, shareholder salary, or dividends)

Your student loan deductions will be paid automatically by your employer if you’re earning over $20,020 a year and use the right tax code. Automatic repayments are 12% of everything you make over $20,020, but you have the option to pay more than the amount due. And if you're self-employed, you will have to repay the loan yourself.

Manage your student loan well and keep on top of your repayments to avoid penalties! Use the student loan repayment calculator to get you started. Late payments may be charged with a late payment interest if the overdue amount is more than $334. The interest is currently at 7.5%.

Tip: If you think you're going to be late on your repayment, you may contact the IRD. They might be able to reduce the interest up to 5.5%!

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Can I pay back more than the minimum amount?

Most people try to pay their student loan balance right away to avoid interest fees. New Zealand has an interest-free student loan, so you don't have to worry about that, but you can definitely consider paying it off faster to start saving more for yourself.

Again, it would help if you work out how long it will take you to repay your student loan before getting one. A student loan is binding, which is why it's important to take full responsibility for it. 

What happens if I leave New Zealand?

If you leave the country for more than 183 consecutive days (about six months), you might be considered an overseas-based customer and will have to start paying interest. Student Loan interest rate is currently at 3.5% and is set at the start of each tax year.

Interests can hurt your wallet, but what you can do is set up a nominated person to act on your behalf and manage your student loan while you're away instead.

Not comfortable sharing your student loan information with anyone? You can make a payment from overseas through your myIR account by direct debit, credit or debit card, and international money transfer.

There are some circumstances and factors that can help you keep your student loan interest free, some of which are:

• If your return to New Zealand was unexpectedly delayed
• If you're volunteering overseas
• If you're sent overseas for work or is working overseas for the government
• If you've received a government-funded scholarship for study or an internship overseas
• If you're suffering from a serious illness, injury, or disability that has stopped you from doing paid work to meet your student loan repayment obligation

You will need to provide supporting documentation to apply to keep your student loan interest free.

Have any more questions? Here are some resources you can check!

• Study Link - Student loan and allowances information
• IRD - Student loan balances and payment details
• NZ Government - Education in New Zealand, loans, scholarships, etc.

Start your application as early as now! You can apply online and check all the requirements on your mobile phone, in the comforts of your home.

Make sure you have the best mobile plan for an uninterrupted internet connection, especially when paying for your student loans or checking your balances.

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