Student Loans & Allowances

This can be a challenging and confusing area. We have compiled the following information as we believe these are essential facts which future and current students and graduates should know.

 

Student Allowance

To calculate your eligibility for a student allowance, please use the Student Allowance rate calculator.

 

Student Loan

The Student Loan is made up of three parts - compulsary fees, course-related costs and living costs. This loan must be repayed. For specific information on the student loan, please click here.

 

Paying back your student loan

If you earn more than the repayment threshold of $19,084 ($367 per week) for the tax year 1 April to 31 March, you are required to start making repayments. This applies even if you are still studying. You can choose to make payments even if you are not earning over this threshold.

 

Voluntary repayment bonus

The voluntary repayment bonus is a 10% bonus received when making voluntary repayments that total $500 or more in a tax year. To qualify, your loan balance must be $550 or more at the beginning of the year. A voluntary payment is a payment made on top of what you already repay for the tax year.

To qualify you must:

  • Be up-to-date with student loan repayments and filing your income tax returns (if required)
  • Your loan balance with IRD is $550 or more at 1 April
  • Your voluntary repayments for the tax year total $500 or more

For example, if you make a voluntary repayment of $700, your loan will be reduced by this amount and a further $70 will be taken of the balance of your loan as a bonus ($700 x 10%).

Use the IRD's repayment calculator to compare the difference made by making voluntary repayments.

 

Travelling or living overseas

Interest will be charged on your student loan if you are overseas for 6 months or more (183 consecutive days). If you are overseas for less than 6 months, you can continue to make repayments toward your student loan before you leave or while you are overseas.

If you are out of the country for 6 months or more (184 consecutive days), you are generally not eligible for an interest-free student loan. The current interest rate for 2012 year is 6.6%. You can take a repayment holiday. This has been shortened to one year and borrowers must apply for this and also provide a contact person when leaving after 1 April 2012. This change was part of the 2011 budget.

For more information on any of the information above, please do not hesitate to contact one of our team or IRD's help team.