Janice Lozano
Paying off a student loan in New Zealand can be a long process, but it is a great feeling to be debt-free. There are a few things to keep in mind when paying off a student loan in New Zealand, such as using the right tax code so that repayments can be deducted automatically from your salary or wages. It is also important to know that student loans in New Zealand are interest-free if you stay in the country, but if you go overseas, you may be charged interest, depending on how long you are away for. Additionally, you can make extra repayments to pay off your loan faster and use a student loan repayment calculator to see how long it will take to pay off your loan.
| Characteristics | Values |
|---|---|
| Interest on student loans | Interest-free if you stay in New Zealand. Charged if you go overseas, depending on how long you stay outside the country. |
| Repayment calculation | 12% of every dollar you earn over the repayment threshold. |
| Repayment threshold | $24,128 per year for the 2026 tax year. |
| Repayment methods | Interim student loan repayments, end-of-year student loan repayments, or a final lump sum payment. |
| Overpayment | Any overpayments will be repaid to you or applied to your myIR account based on your overpayment settings. |
| Notification of loan balance | You will be notified when your loan balance is less than $1,000. |
| Notification of loan closure | You will be notified when your loan is paid off and deductions are no longer required. |
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What You'll Learn
Student loan repayment methods
Salary or Wage Income
If you earn a salary or wage, your student loan repayments will be automatically deducted from your pay. It is important to ensure that you are using the correct tax code so that the right amount is deducted. To indicate that you have a student loan, you must add 'SL' to your tax code. The amount deducted each year is 12% of every dollar you earn over the repayment threshold. For example, in the 2026 tax year, the annual repayment threshold is $24,128, or $464 per week. If you earn $600 per week before tax, your repayment will be $16.32 ($600 - $464 (weekly threshold) = $136 x 12% = $16.32).
Multiple Sources of Income
If you have multiple sources of income, you may be able to apply for a special deduction rate from Inland Revenue. This can be relevant if you receive benefits and payments from the Ministry of Social Development (MSD) as your main source of income, as no student loan repayments are deducted from these sources.
Secondary Jobs
The repayment threshold does not apply to secondary jobs, as it has already been taken into account with your main job. This means you repay 12% of every dollar you earn from your secondary job. For example, if you earn $200 per week before tax in a secondary job, your repayment will be $24 ($200 x 12% = $24).
Living Overseas
If you live overseas, you will need to make minimum repayments on your student loan or apply for a temporary repayment suspension. You may be charged interest on your loan while living overseas, depending on how long you are away. If you live in certain countries, such as Australia, the United Kingdom, Europe, Canada, or the United States, you can set up direct debit payments in your myIR account.
Extra Repayments
You can make extra repayments to your loan at any time to pay it off faster. There is a student loan repayment calculator available on the Inland Revenue website to help you estimate how long it will take to repay your loan, including with extra payments.
End-of-Year Repayments
In addition to the above methods, there are interim and end-of-year student loan repayments. You will be notified if you have an amount to pay at the end of the year, and these payments count towards your annual repayment obligation.
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Interest charges
If you are a New Zealand-based customer, you are entitled to an interest-free student loan. However, interest is charged on student loans for overseas-based customers. This interest is calculated daily and added to the loan balance at the end of the tax year. The daily rate is 0.01342%, while the annual rate is 4.9%.
If you don't make your payments on time, you may be charged late payment interest. Late payment interest is charged only on the overdue amount, and only if the overdue amount is $334 or more. The late payment interest rate is currently 8.9%, calculated as a monthly rate of 0.713%. If you stick to a payment plan, you may be able to switch to a reduced late payment interest rate of 6.9%, or a monthly rate of 0.557%.
If you go overseas, you may be charged interest depending on how long you are away for. Before leaving New Zealand, you must contact Inland Revenue to determine if you need to continue making student loan repayments. If you have only one employer, they will be notified when your loan will be paid off in the next three pay periods. They will be asked to adjust the last loan payment to clear your loan balance, after which student loan deductions will stop.
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Repayment thresholds
If you are living in New Zealand and earning a salary or wages, you need to start making repayments once you earn over $24,128 a year before tax ($464 a week before tax). The amount you pay is 12% of every dollar you earn over the repayment threshold. For example, in the 2026 tax year, if you earn $600 a week before tax, your repayment will be $16.32. You can calculate this as follows: $600 (weekly pay before tax) − $464 (weekly repayment threshold) = $136. $136 (income over the repayment threshold) × 12% (repayment rate) = $16.32.
If you are self-employed or have income from sources other than salary or wages, you may need to make your own student loan repayments. You can use the Inland Revenue website's student loan repayment calculator to see how long it will take you to pay off your loan.
If you are living overseas, you may need to keep making student loan repayments to Inland Revenue, unless you can get a temporary repayment suspension. You may also be charged interest, depending on how long you are overseas for.
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Repayment obligations
If you are self-employed, you must ensure that your tax agent is aware of your student loan so that they can deduct the correct amount from your invoices. If you have multiple sources of income, you may be able to apply for a special deduction rate from Inland Revenue.
You can make extra repayments to your loan if you want to pay it off faster. The Inland Revenue website offers a student loan repayment calculator to help you determine how long it will take you to repay your loan, taking into account any extra repayments you plan to make.
If you are living overseas with a New Zealand student loan, you may need to continue making repayments unless you can get a temporary repayment suspension. The length of time you are out of New Zealand can affect how much interest is applied to your loan and when repayments are due.
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Loan balance checks
To check your student loan balance in New Zealand, you can use Inland Revenue's online service, myIR. Here, your student loan balance will be displayed in your student loan account section. However, note that the displayed balance may not include all your recent payments as it can take several days for a payment to show up in myIR.
You can also check your loan balance by calling the IRD or checking your latest student loan statement.
If your loan balance is less than $1,000, IRD will notify you that you are close to repaying your loan. If you have salary or wage income and only one employer, IRD will notify your employer when your loan will be paid off in the next three pay periods. They will ask your employer to adjust the last loan payment to clear your loan balance and then stop student loan deductions. Once your loan is paid off, IRD will let you know that student loan deductions are no longer required.
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Frequently asked questions
You can check your loan balance in Inland Revenue's online service, myIR. When your loan balance is less than $1,000, Inland Revenue will let you know that you are getting close to repaying your loan.
If you earn a salary or wages, your employer will deduct repayments from your pay to put towards your loan. You can also make extra repayments to your loan if you want to pay it off faster.
Once your loan is paid off, Inland Revenue will let you know that student loan deductions are no longer required. You will be debt-free.
