Ibrahim Gardner
If you have a student loan, you may be wondering how to manage and repay it. This is a guide on how to pay your student loan to the Inland Revenue Department (IRD) in New Zealand. It covers various topics, including repayment calculators, tax codes, and payment methods. It also provides information on making extra repayments, the impact of living overseas, and the role of employers in the repayment process. Understanding these aspects will help individuals effectively manage and repay their student loans.
| Characteristics | Values |
|---|---|
| Repayment calculation | Use the repayment calculator to check how long it will take to pay off your loan. |
| Repayment options | Make extra repayments to pay off the loan faster. |
| Repayment options | If you live overseas, either make minimum repayments or apply for a temporary repayment suspension. |
| Repayment options | If you live in Australia, the UK, Europe, Canada, or the US, set up direct debit payments in your myIR account. |
| Repayment options | Make a one-off payment or ask your employer to make extra repayments. |
| Repayment options | If you have more than one job, you can apply for a special deduction rate for your secondary job. |
| Tax code | Use the right tax code so that your employer knows they need to make deductions from your salary or wages. |
| Payment methods | Set up direct debits, pay with Visa or Mastercard debit or credit cards, or make international money transfers online or through your bank. |
| Payment methods | Make direct payments to the IRD's Westpac bank account. |
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What You'll Learn
Repaying student loans while living overseas
Notify the Relevant Authorities:
If you're planning to live overseas for an extended period, it's important to inform the appropriate student loan organisation in your home country. For example, in the UK, you must notify the Student Loans Company (SLC) if you're moving overseas or to the Republic of Ireland (ROI) for more than three months. Failure to do so may result in penalties.
Understand Repayment Thresholds:
The income threshold at which you're required to start repaying your student loan may differ when you're living abroad. The threshold varies depending on the country you're residing in due to differences in living costs. Make sure you understand the repayment thresholds for your specific country to ensure you're meeting your repayment obligations.
Provide Income and Employment Information:
When living overseas, you may be required to complete an 'Overseas Income Assessment Form' or a similar document to provide details of your income and employment status. This information will be used to determine your repayment obligations. Keep in mind that if your income changes while you're abroad, you may need to notify the relevant authorities to reassess your repayments.
Explore Repayment Options:
Depending on your circumstances, you may have different options for repaying your student loan. These could include setting up automatic payments from your international bank account, making one-off payments, or consolidating or refinancing your loans to take advantage of lower interest rates or longer repayment terms.
Consider Loan Forgiveness Programs:
If you're working in certain sectors or organisations, you may be eligible for student loan forgiveness programs. For example, the Public Service Loan Forgiveness (PSLF) program in the US forgives federal loan balances after 120 on-time payments while working for a qualified employer. However, moving overseas may impact your eligibility, so be sure to carefully review the guidelines for any forgiveness program you're considering.
It's important to stay informed about your rights and responsibilities regarding student loan repayment while living overseas. Each country has its own rules and regulations, so be sure to seek out specific guidance for your situation.
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Making extra repayments
You can make extra repayments to your student loan if you want to pay it off faster. There are two ways to do this:
One-off payment
You can make a one-off payment by checking out the different ways to make a payment to the IRD.
Through your employer
Your employer can make these extra repayments from your income, on top of your standard student loan deductions. You can also ask your employer to make extra repayments when you earn less than the student loan repayment threshold. To do this, it's important to use the right tax code when you're working. Adding ''SL' to your tax code tells your employer that you have a student loan and that they need to deduct repayments from your pay.
The amount you have to pay towards your student loan each year is 12% of every dollar you earn over the repayment threshold. For example, if you earn $200 a week before tax in a secondary job, your repayment will be $24. You can use the IRD repayment calculator to check what your student loan repayments will be and how long it'll take to pay off your loan, including any extra payments you plan to make.
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Student loan repayment calculator
A student loan repayment calculator can be a useful tool to estimate your loan payments and how long it will take you to pay off your loans. The amount you repay and the time it takes will depend on several factors, including the type of loan, your interest rate, and how much you repay over time.
Online student loan calculators can help you estimate your payoff date based on variables such as your current balance, interest rate, and monthly payment amount. By gathering this information and inputting it into a calculator, you can get an idea of how long it will take to pay off your student loans.
It is important to remember that making only the minimum payments will result in the maximum repayment period. However, additional payments can significantly reduce both the timeline and the total interest paid. You can make extra repayments to your student loan if you want to pay it off faster. This can be done through a one-off payment or by asking your employer to make these extra repayments from your income.
Before taking out a student loan, it is advisable to explore other options such as grants, scholarships, and work-study programs. These alternatives do not require repayment and can help cover education costs, reducing the need for a loan. Additionally, creating a comprehensive budget can help limit the amount you borrow and prevent excessive borrowing.
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Using the right tax code
When it comes to repaying your student loan, it's important to use the right tax code. This lets your employer know they need to make deductions from your salary or wages to put towards your loan.
If you're earning a salary or wage and have a student loan, you must add 'SL' to your tax code. This tells your employer that you have a student loan and that they need to deduct repayments from your pay. The amount you have to pay towards your student loan each year is 12% of every dollar you earn over the repayment threshold. For example, for the 2026 tax year, the annual repayment threshold is $24,128. So, if you earn $600 a week before tax, your repayment will be $16.32.
It's important to note that benefits and payments from the Ministry of Social Development (MSD) are considered main sources of income, but they use the M tax code, not M SL. This means no student loan repayments are deducted from these sources of income. If you receive a payment from MSD and have other income, you may want to apply for a student loan special deduction rate.
Additionally, if you have more than one job and earn less than the pay period repayment threshold from your main job, you can apply for a special deduction rate for your secondary job. The repayment threshold doesn't apply to secondary jobs because it has already been considered with your primary job. This means you repay 12% of every dollar you earn from your secondary job towards your student loan.
You can also make extra repayments on top of your standard student loan deductions. You can ask your employer to make these extra repayments, or you can make a one-off payment directly to the Inland Revenue Department. Payments can be made electronically through your bank or by credit or debit card, although there may be convenience fees associated with card payments.
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Paying from overseas
If you are a student loan borrower and are planning to live overseas, your student loan repayments will be based on your loan balance when you become overseas-based. The day you leave New Zealand, you will be considered overseas-based, and interest on your student loan will be backdated to the day after you left. Your repayments will be based on your total loan balance on 31 March of each year you are overseas-based. If your loan balance increases, your minimum repayments may go up and will not decrease if your balance gets smaller.
You can apply for a temporary repayment suspension when you live overseas. If you do not have this suspension, interim student loan repayments are due, which count toward your end-of-year repayment obligation. Your student loan may remain interest-free if you are overseas due to an unexpected delay in returning to New Zealand, if you are unexpectedly required to travel after returning to New Zealand, or if you have a serious illness, injury, or disability that prevents you from working and meeting your repayment obligations. To apply for an interest-free loan, you must provide supporting documentation.
If you live in Australia, the United Kingdom, Europe, Canada, or the United States, you can set up direct debit payments in your myIR account. You can also add an alternative contact person to your student loan account in myIR. If you are in a different country, you can use a money transfer provider to make your payments, but it is your responsibility to ensure that the funds clear by the due date. If they do not, penalties or interest may be charged.
It is important to note that if you are present in New Zealand for 32 days or more in a 184-day period, you are considered a New Zealand-based borrower, and interest will not be charged.
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Frequently asked questions
You can set up direct debit payments in your myIR account if you live in Australia, the United Kingdom, Europe, Canada or the United States. You can also pay with Visa or Mastercard debit or credit cards, or make international money transfers with online services or through your bank.
You can check what your student loan repayments will be and how long it'll take to pay off your loan using IRD's repayment calculator. You can even include 'extra payments' to see what effect they'll have.
It is important to use the right tax code when you are working, as this lets your employer know they need to make deductions from your salary or wages.
You can make extra repayments to your student loan if you want to pay it off faster. You can either make a one-off payment or ask your employer to make extra repayments on top of your standard student loan deductions.
If you have more than one job and earn less than the pay period repayment threshold from your main job, you can apply for a special deduction rate for your secondary job.
