Student Loan Scheme Changes

Changes to student loans will make it easier for you to manage and repay your student loan, whether you’re in New Zealand or overseas.

The majority of changes will take effect from April 2012, with additional changes being introduced in April 2013.

Adding “SL” to your tax code

If you're in New Zealand and earn salary or wages, you need to add "SL" to your tax code from 1 April 2012 regardless of how much you earn, unless you have an exemption. This will ensure you're making the right repayments toward your student loan through your pay.

Find out more about student loan repayment tax codes and your obligations

Repayment exemptions for full-time students

You can apply for a repayment deduction exemption if you're studying full-time and expect to earn less than the annual repayment threshold ($19,084 for the 2013 tax year). You can now apply for this exemption through your online services account, so you're exempt from 1 April.

Find out more about the repayment deduction exemptions

Reduced rates for secondary earnings

For borrowers with more than one job, you can apply for a student loan special deduction rate for your secondary earnings if you earn less than the pay period repayment thresholdfrom your main job. You can now apply for a reduced rate through your online services account, for deductions to be made from 1 April 2012.

Find out more about the special deduction rate

View all your loan information on one site

From April 2012, borrowers currently studying will see a complete and up-to-date view of their loan balance including their StudyLink transactions through Inland Revenue's secure online service.

Register for secure online services.

StudyLink will be transferring loan account information to us on a daily basis. This means the statements you'll receive from us will also include your StudyLink transactions so whether it's online or on paper, you will see your total loan balance every time.

Pay period repayment obligations

If you're earning above the pay period repayment threshold in New Zealand, your student loan deductions every pay period from 1 April 2012 will be considered your repayment obligation, unless there's a significant over or under-deduction. Your repayment deductions are generally considered final. However, we'll check your pay details regularly to make sure your deductions are correct.

• If there's a significant under-deduction, we can require you to have catch-up deductions made through your employer to recover the amount.
• For significant over-deductions, you can either request a refund or have this applied to your loan balance so you may be eligible for a 10% voluntary repayment bonus.

If you have income from other sources such as interest, dividends, rental or business income, you may still be required to have an annual end-of-year assessment.

Find out more about repayment obligations, and

Find out about significant over and under-deductions

Extra repayments through salary or wages

You can ask your employer to make extra student loan repayments through your salary or wages. Just let them know how much extra you want to pay and your employer will send us your extra repayments along with your standard student loan deductions each month.

Find out about making extra repayments

Annual administration fee

An annual administration fee of $40 will be charged to your account if you have a student loan balance of $20 or more, unless you have been charged StudyLink's establishment fee in the same year.

Changes to late payment penalties

From 1 April 2012, the late payment penalty will be called late payment interest and will reduce from 1.5% to .843%. There will be further changes to how this is calculated from 1 April 2013.

Recalling the entire loan amount

For borrowers who have consistently been non-compliant with their repayment obligation, we now have the power to demand full repayment of a student loan, whether or not the entire amount is outstanding.

Shorter repayment holiday

Government has proposed changes to shorten the repayment holiday for overseas-based borrowers from 3 years to one year, and to require borrowers leaving New Zealand to apply for the repayment holiday and provide a contact person, from 1 April 2012.

Excluding losses from calculating repayment obligation

There is also a proposed change that from 1 April 2012, you won’t be able to use losses from business or investment activities to offset your income and reduce your student loan repayment obligation.

Alternative contact person for new student loan applications

There is also a proposed change for borrowers to provide an alternative contact person for all new student loan applications for study starting from 1 January 2013.

Other changes announced in Budget 2011

Government has also announced further changes to student loans in Budget 2011.

• Borrowers with an overdue repayment obligation of $500 or more that's been overdue for 12 months or longer won't be able to borrow through the Student Loan Scheme. This applies to all student loan applications received on or after 7 February 2013 and includes amounts under instalment arrangement.
• The repayment threshold will remain at $19,084 until 31 March 2015.

Pay period threshold for student loan deductions for 2013 tax year

If your pay period is ...	the repayment threshold is ...
weekly	$367
fortnightly	$734
4-weekly	$1,468
monthly	$1,590

Thanks IRD!