Paying back your loan
How and when to start paying back your Student Loan if you're studying or working. How to pay back the full amount and knowing how much you've paid back.
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When to start paying back your Student Loan
If you earn more than the repayment threshold of $19,084 (about $367 per week) for the tax year 1 April to 31 March, you are required to start making repayments towards your loan even while you are studying.
You can make repayments towards your loan to StudyLink anytime after you've received your first advance payment, up until your loan is transferred to Inland Revenue (on 28 February of the year after your course finishes).
You can start paying back your loan while you're still studying, even if you're earning less than the repayment threshold.
Make sure you register for Inland Revenue's online services, it allows you to view details about your account, file returns, send mail and update details such as bank account, addresses and phone numbers straightaway. You can also request an up to date statement for your Student Loan account.
Repayments
Repayments can be made to both StudyLink and Inland Revenue, but remember any voluntary repayments you make to StudyLink will not qualify for the ten per cent bonus.
Repayments to Inland Revenue
Repayments to Inland Revenue can be made in several ways. If you are working and you earn over the repayment threshold, you will usually make your repayments through your salary or wages.
The Inland Revenue website gives you information on repayment methods, and you can request a copy of their booklet Student Loans - Making repayments (IR 224).
If you make a repayment to Inland Revenue it won't show on your StudyLink loan statement. It will only show on your Inland Revenue loan statements.
Overdue repayment obligations
From 7 February 2013, students who have an overdue repayment obligation of $500 or more, which has been overdue for a year or more, will not be entitled to further Student Loans while their repayment obligation remains outstanding.
This will apply to all new applications made from 7 February 2013.
Repayments to StudyLink
Payments to StudyLink can be made by cheque or by automatic payment.
If you would like to make automatic payments call us and we will send you an automatic payment form.
If you would like to make a payment by cheque the minimum amount is $100. Include your name, address, StudyLink client number, Inland Revenue number and a note stating the cheque is for your Student Loan.
Make your cheque payable to StudyLink and send it to:
StudyLink Centre
FreePost 113907
Private Bag 11070
Palmerston North 4442
Note: If you make a repayment to StudyLink it won't show on your Inland Revenue statement and any voluntary repayments will not qualify for the ten per cent bonus.
Voluntary repayment bonus
Pay off your loan faster than required and you might be eligible for a 10% repayment bonus.
Voluntary repayments are payments made on top of what you need to repay to Inland Revenue for a tax year. Payments can be made as a single lump sum or by smaller amounts during the year. To qualify for the bonus the extra repayment needs to total $500 or more in a tax year (1 April to 31 March). More information is available on Inland Revenue's website.
Repayments made to StudyLink before the loan is transferred to Inland Revenue will not qualify for the ten per cent bonus.
To find out how much difference just a little extra can make, try out Inland Revenue's repayment calculator.
Note: As when making any financial decisions, you're advised to seek appropriate financial advice before taking advantage of the voluntary repayment bonus.
How to make repayments from your income
If you receive salary or wages, Student Allowance, or other income support, and earn more than the repayment threshold, your employer or organisation paying you will make repayment deductions from your income on your behalf.
You need to select a Student Loan tax code on your tax code declaration (IR 330) and return it to your employer. Ten cents in every dollar you earn over the repayment threshold will be deducted by your employer, to repay your Student Loan.
The Inland Revenue website gives you more information on what tax code you should be using.
How to make repayments from your income if you're self-employed
If you are self-employed or earning income from other sources you won't automatically have repayment deductions made from your income.
Instead you will need to file an individual tax return (IR 3) at the end of the tax year. Once you have filed your IR 3, Inland Revenue will work out how much you need to repay towards your Student Loan. You have until 7 February of the next year (or 7 April if you have a tax agent) to pay this amount in full. Inland Revenue will work out whether you are required to make interim repayments for the following year, along with the amount and when they are due to be paid.
Going overseas?
If you have a Student Loan balance with Inland Revenue, before you go overseas you need to remember the following:
- You will need to keep Inland Revenue informed of your contact details at all times. If you won't have a fixed address, you can nominate a person to check your loan balance and make payments or queries on your behalf.
- Register for Inland Revenue's online services to stay in touch with them and your account while you're away.
- You may be entitled to a Student Loan repayment holiday for up to 3 years.
- If you're not on a repayment holiday, you must make payments twice a year towards your Student Loan. Unlike when you are in NZ interest applies on your loan while you are away.
- You're generally not eligible for an interest-free Student Loan if you're away for 6 months (184 days) or more.
- You can use your credit or debit card to pay your Student Loan from overseas through Inland Revenue's secure online payment facility.
Paying back the full amount
You can pay back the full amount of your loan at any time.
Remember, to check whether your loan is still with us, or whether it has transferred to Inland Revenue.
Before you make a final payment, make sure you call whoever your loan is with to find out your final loan balance.
Note: Repayments made to StudyLink before the loan is transferred to Inland Revenue will not qualify for the ten per cent bonus.
Inland Revenue administration fee
The Government has announced that a $40 annual administration fee will be introduced for Student Loans that are transferred to Inland Revenue. This fee is subject to legislation due to be passed later in 2011.
It is expected that the administration fee will:
- not be charged any year where a student also had a StudyLink establishment fee charged
- be charged each tax year from the tax year ending 31 March 2012.
Knowing how much you've paid back
If your only income is from salary or wages, a Student Allowance, or a benefit, you won't have to file a tax return, but you may receive a personal tax summary at the end of the tax year (31 March).
If you do receive a personal tax summary, you'll also get an end-of-year repayment calculation.
Your end-of-year repayment calculation will show whether you've paid enough towards your Student Loan, or whether you need to pay more.
If you paid more towards your Student Loan during the year than you needed to, you need to let Inland Revenue know what you want to do with the overpayment.
If you underpaid your Student Loan for the year, you will have until 7 February of the next year (or 7 April if you have a tax agent) to pay this amount in full.
