New Zealand's student loan scheme helps pay for tertiary education with interest-free loans (if you stay in NZ). Repayments are automatic through your salary or wages, starting once you earn over the threshold. Understanding how repayments work helps you plan finances and pay off debt faster.
| Income Type | Threshold | Repayment Rate |
|---|---|---|
| Salary/Wages | $24,128/year ($464/week) | 12% of income over threshold |
| Self-Employment | $24,128/year | 12% of income over threshold |
| Overseas Income | NZD equivalent | 12% over threshold |
Employer automatically deducts student loan repayment with PAYE tax.
Salary $55,000 per year:
Your tax code tells employer to deduct loan repayments:
| Without Loan | With Loan | Meaning |
|---|---|---|
| M | ME | Main income with student loan |
| SB | SB SL | Secondary income with student loan |
| S | S SL | Secondary lower with student loan |
Forgot to add SL to tax code: No loan repayments deducted during year, large bill at year-end
Example: $55K salary, forgot SL = Owe $3,705 in March
Always notify employer when starting job if you have student loan.
Self-employed make loan repayments through tax system:
Living overseas for 6+ months triggers different rules:
| Loan Balance | Annual Minimum | Monthly |
|---|---|---|
| Under $30,000 | $2,496 | $208 |
| $30,000 - $45,000 | $3,744 | $312 |
| $45,000 - $60,000 | $4,992 | $416 |
| Over $60,000 | $6,240+ | $520+ |
Going overseas? Notify IRD in advance to avoid penalties. If earning well overseas, pay more than minimum to clear debt before interest compounds. Even at 3.1%, interest on $50K loan = $1,550/year.
Can pay extra to clear loan faster:
Log into myIR account to see:
| Year | Salary | Annual Repayment | Balance |
|---|---|---|---|
| Graduate (2020) | $48,000 | $2,865 | $45,000 |
| Year 2 (2021) | $55,000 | $3,705 | $41,295 |
| Year 5 (2024) | $75,000 | $6,105 | $23,500 |
| Year 8 (2027) | $90,000 | $7,905 | $0 (Paid off!) |
First job out of university: $50,000
5 years experience: $80,000 salary
Student working part-time: $15,000/year
Key point: Don't pay until earning over $24,128. Focus on studies first.
Main job $45,000 + Side business $20,000
Accelerating repayment to clear loan faster:
Moving to Australia with $45,000 loan:
Teaching degree graduate with typical loan:
| Year | Position | Salary | Repayment | Balance |
|---|---|---|---|---|
| 2020 | Graduate | $51,000 | $3,225 | $48,000 |
| 2021 | Year 2 | $54,000 | $3,585 | $44,415 |
| 2023 | Year 4 | $62,000 | $4,545 | $32,000 |
| 2026 | Senior | $78,000 | $6,465 | $8,200 |
| 2027 | Senior | $80,000 | $6,705 | $0 ✓ |
Total time: 7 years to clear $48,000 loan. No interest paid (stayed in NZ).
Graduate considering UK working holiday with $38,000 loan:
Started new job, didn't tell employer about student loan:
Lesson: Always update tax code to ME when starting employment. Avoid year-end surprises.
Doctor with large loan but high income potential:
Total time: 9 years to clear $120,000 loan. High income accelerates payoff despite large balance.
Quiz on Student Loan Repayments
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