Navigating the repayment of student loans can seem daunting, but New Zealand’s system is designed to be straightforward and manageable. Understanding how repayments work, knowing your obligations, and exploring strategies for efficient repayment can help alleviate any concerns and set you on a path to financial stability.
New Zealand’s student loan repayment system is income-contingent, meaning repayments are based on what you earn, not on the amount you borrowed. This ensures that repayments remain affordable and are adjusted to your financial circumstances.
Income Thresholds and Repayment Rates
Repayment of your student loan begins once your income exceeds a certain threshold. As of 2025, the income threshold is $24,128 annually. Here’s a breakdown of how it works:
- Below Threshold: If your annual income is below $24,128, you are not required to make any repayments.
- Above Threshold: For every dollar you earn over the threshold, you pay 12 cents towards your student loan.
For example, if you earn $30,000 a year, your repayment amount would be calculated on the difference between your income and the threshold ($30,000 – $24,128), which is $5,872. You would then pay 12% of $5,872, amounting to approximately $705 per year.
Employer Deductions
Repayments are typically deducted directly from your paycheck by your employer, similar to tax deductions. This ensures that payments are made regularly and reduces the risk of falling behind on your loan repayments.
Self Employed Payments
If you are self employed, your repayments will be made in a very similar manner to income tax. If you student loan repayments are under $1,000, you are only required to make one payment per year. However, if your student loan repayment is over $1,000 then you need to be making at 3 interim payments, and potentially a final payment.
Managing Your Loan
Keeping track of your loan balance and repayments is crucial for effective loan management. You can access your loan information through:
- MyIR: The Inland Revenue’s online portal, MyIR, allows you to view your loan balance, repayment amounts, and transaction history.
- StudyLink: Initially, you can track your loan status through StudyLink until the loan is transferred to Inland Revenue for repayment.
Conclusion
Repaying your student loan in New Zealand is designed to be straightforward and manageable, with income-contingent repayments and automatic deductions making the process seamless. By staying informed about your repayment obligations, and using available resources to manage your finances, you can effectively handle your student loan repayment and work towards financial independence.