Student Loan Guide


In New Zealand a Student Loan is a loan that can be used to cover items such as university and tertiary fees as well as the course related costs associated with the study and living costs to complete the study.

Fees: these are paid directly to the university or tertiary institution.

Course Related Costs: examples of this include text books, computer equipment and stationery etc.

Living Costs: this usually covers accommodation costs such as rent, amenity fees and food.

The eligibility criteria to get a Student Loan includes but is not limited to:

  • Being a New Zealand Citizen or permanent resident, a refugee or being sponsored by a family member who was a refugee or protected person
  • Taking out the loan to commence studying at an approved education provider
  • Not being at secondary school
  • Never being declared bankrupt
  • Never being behind on Student Loan repayments by >=$500
  • Not studying for 32 weeks or less

The first $19,448 of the person’s income is not subject to Student Loan payment however every dollar after that figure is repaid at 12c in the dollar at a 0% rate. This 0% interest rate is offered to the loanee until the loanee has been outside of New Zealand for 6months. After that point the loanee is assessed on the balance of the loan with required payments being set. Whilst the loanee is outside of New Zealand they can pause repayments however the loan still accrues interest.

For loanees with multiple sources of income a special deduction rate for secondary and tertiary earnings can apply.

EXAMPLE ONE:

Let’s look at an example of an employee who has a gross salary of $100,000.00 NZD per year. This salary was chosen as it is easier to see the relative percentages of the deductions for each facet of the calculation in the workings process.

  1. For the first $19,448.00 that a person earns in NZ the Student Loan repayment is 0% $19,448.00 * 00.00% (0.0) = $0.00
  2. For the money earned from $19,448.00 onwards the Student Loan repayment rate is 12.00% ($100,000.00 - $19,448.00) * 12.00% (0.1200) = $9,666.24

Looking at the Student Loan payment owing the breakdown is as follows:

  1. 9.67% of the gross salary goes to paying back the Student Loan

EXAMPLE TWO:

Now let’s look at an example of an employee who has a gross salary of $55,000.00 NZD per year.

  1. For the first $19,448.00 that a person earns in NZ the Student Loan repayment is 0% $19,448.00 * 00.00% (0.0) = $0.00
  2. For the money earned from $19,448.00 onwards the Student Loan repayment rate 12.00% ($55,000.00 - $19,448.00) * 12.00% (0.1200) = $4,266.24

Looking at the Student Loan payment owing the breakdown is as follows:

  1. 7.76% of the gross salary goes to paying back the Student Loan