When Do You Start Paying Back Your Student Loan?
In New Zealand student loans are interest-free (as long as you live here) and repayments only begin once you start earning over a certain threshold. You don’t have to pay anything while you’re studying full-time or earning under the repayment threshold.
As of the latest update, if you earn more than $24,128 per year (that’s about $464 a week before tax) you’ll start repaying your student loan. Repayments are automatically deducted through the PAYE system if you're an employee.
How Much Do You Repay?
Once your income goes over the threshold you’ll repay 12% of everything you earn above that line. So if you earn $30,000 per year you’ll pay 12% of the difference between $30,000 and $24,128.
Here’s a rough example:
$30,000 – $24,128 = $5,872
12% of $5,872 = $704.64 per year, or about $13.55 a week.
These repayments are taken out of your wages automatically if your employer knows you have a student loan (you should’ve ticked this on your IR330 tax form when you started the job).
What If You’re Self-Employed or Have Extra Income?
If you’re self-employed or earn extra income through things like rental properties or side gigs you’ll need to make repayments as part of your income tax return. The 12% repayment still applies on income above the threshold but you’ll need to plan ahead so you’re not caught short at tax time.
It’s a good idea to put aside a portion of any untaxed income throughout the year to cover both tax and your student loan repayments.
Can You Make Extra Payments?
Yes, you can make voluntary repayments any time through Inland Revenue (IRD). If you want to pay your loan off faster making extra payments (especially early on) can reduce your total balance and shorten the repayment period.
There’s no penalty for paying early or paying more than required. Just make sure you’re financially comfortable before doing so. Clearing other high-interest debt (like credit cards) might be a higher priority.
What Happens If You Leave the Country?
If you’re overseas for more than 183 days (about six months) your student loan becomes interest-bearing and you’re required to make set repayments based on your total loan balance and not your income.
These payments start at a few hundred dollars a month and increase depending on how much you owe. It’s important to let IRD know before leaving and keep your contact details up to date as falling behind on payments overseas can result in penalties or debt collection.
If you're planning to live overseas long-term you might want to consider paying off your loan faster to avoid interest building up.
How Do You Keep Track of Your Loan?
You can check your student loan balance and repayment history any time through your myIR account on the Inland Revenue website. It shows:
Your current balance
Payments made (both compulsory and voluntary)
Any interest (if applicable)
Your repayment threshold and how close you are
Keeping an eye on this helps you plan ahead, especially if you’re getting close to paying it off or if you’ve had changes in income.
Does the Loan Ever Go Away on Its Own?
Student loans in New Zealand don’t expire and aren’t written off due to age or time alone. The only way to clear your student loan is by repaying it in full. That said, there’s no interest (as long as you remain in the country) and no repayments if your income stays below the threshold. This makes it one of the most manageable types of debt.
Stay Informed, Stay in Control
Understanding how your student loan is paid off gives you more control over your finances. Whether you're paying the minimum, chipping in extra or heading overseas knowing what to expect helps avoid surprises and keeps your financial future on track.
Your loan helped you take a step forward in life. With the right knowledge you can stay on top of it and pay it off in a way that works for you.