Date: 17th April 2012
Changes to student loans will make it easier for you to manage and repay your student loan, whether you’re in New Zealand or overseas.
The majority of changes will take effect from April 2012, with additional changes being introduced in April 2013.
If you’re in New Zealand and earn salary or wages, you need to add “SL” to your tax code from 1 April 2012 regardless of how much you earn, unless you have an exemption. This will ensure you’re making the right repayments toward your student loan through your pay.
Repayment exemptions for full-time students
You can apply for a repayment deduction exemption if you’re studying full-time and expect to earn less than the annual repayment threshold ($19,084 for the 2013 tax year). You can now apply for this exemption through your online services account, so you’re exempt from 1 April.
For borrowers with more than one job, you can apply for a student loan special deduction rate for your secondary earnings if you earn less than the pay period repayment thresholdfrom your main job. You can now apply for a reduced rate through your online services account, for deductions to be made from 1 April 2012.
View all your loan information on one site
From April 2012, borrowers currently studying will see a complete and up-to-date view of their loan balance including their StudyLink transactions through Inland Revenue’s secure online service.
StudyLink will be transferring loan account information to us on a daily basis. This means the statements you’ll receive from us will also include your StudyLink transactions so whether it’s online or on paper, you will see your total loan balance every time.
If you’re earning above the pay period repayment threshold in New Zealand, your student loan deductions every pay period from 1 April 2012 will be considered your repayment obligation, unless there’s a significant over or under-deduction. Your repayment deductions are generally considered final. However, we’ll check your pay details regularly to make sure your deductions are correct.
If you have income from other sources such as interest, dividends, rental or business income, you may still be required to have an annual end-of-year assessment.
You can ask your employer to make extra student loan repayments through your salary or wages. Just let them know how much extra you want to pay and your employer will send us your extra repayments along with your standard student loan deductions each month.
An annual administration fee of $40 will be charged to your account if you have a student loan balance of $20 or more, unless you have been charged StudyLink’s establishment fee in the same year.
From 1 April 2012, the late payment penalty will be called late payment interest and will reduce from 1.5% to .843%. There will be further changes to how this is calculated from 1 April 2013.
For borrowers who have consistently been non-compliant with their repayment obligation, we now have the power to demand full repayment of a student loan, whether or not the entire amount is outstanding.
Government has proposed changes to shorten the repayment holiday for overseas-based borrowers from 3 years to one year, and to require borrowers leaving New Zealand to apply for the repayment holiday and provide a contact person, from 1 April 2012.
There is also a proposed change that from 1 April 2012, you won’t be able to use losses from business or investment activities to offset your income and reduce your student loan repayment obligation.
There is also a proposed change for borrowers to provide an alternative contact person for all new student loan applications for study starting from 1 January 2013.
Government has also announced further changes to student loans in Budget 2011.
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