The lowdown on Student Loans
The thought of paying for tertiary study can be pretty daunting.
That’s why the government has created a student loan system that allows you to borrow money to pay for fees and course related costs.
Being a loan, this money does have to be paid back eventually. However, the good news is that as long as you’re living in New Zealand, you won’t ever have to pay interest on your loan.
And to sweeten the deal even more, there’s no set timeframe for paying back your loan – you can take your time chipping away at it as you earn.
Of course, there’s no such thing as a free lunch so there are some conditions.
- Student loans are only available to tertiary students taking approved courses and meeting certain criteria.
- If you’re under 18, you will need your parent/caregiver’s consent when applying (although there are exceptions to this so make sure you check the StudyLink website for the full list of requirements).
So what does it cover?
Tertiary study isn’t cheap, especially when you take into account things like buying textbooks, getting to and from classes and, in some cases, even relocating to a new city or part of town. It all adds up.
Student loans are designed to help you with these costs by breaking your loan down into three parts:
- Course fees (the cost of tuition)
- Course-related costs (materials such as textbooks or supplies as well as services such as printing, binding etc.)
- Living costs (to help with your weekly expenses)
You can generally borrow up to the full value of your course fees – this is what most students tend to do.
When it comes to course-related costs, you can usually borrow up to $1,000 a year.
And if you need a loan to help cover living costs, you can add to your loan up to $228.81 a week.
You can't have both
- You can't get both the full amount of Student Loan living costs and the Student Allowance at the same time.
- If your student loan is approved first, you’ll get the weekly living costs payments that you’ve asked for.
- Once your Student Allowance is approved, your living costs will reduce by the amount of Student Allowance you get.
- Example - You're getting weekly living costs payments of $228.81.
- Your Student Allowance is approved for $100 a week so....
- your Student Loan living costs payment will go down to $128.81 a week.
It’s totally up to you to pick and choose which parts of the loan you want.
Obviously, since you will have to pay it back, it makes sense to only borrow what you really need.
How do you apply for a student loan?
- You’ll need to apply for a student loan each time you enroll for a new study period (usually once a year).
- It’s a good idea to apply as soon as you’ve decided on doing further study – even if you’re still deciding what or where you want to study – just to make sure you get paid on time.
- The fastest and easiest way to apply is online at www.studylink.govt.nz
Each time you apply, you’ll be able to borrow for course fees and living costs. Once your application has been accepted, you can then separately claim course-related costs through StudyLink.
To keep your student loan…..
- You must pass at least half of your course workload
- This is assessed after about two years of study (1.6EFTS)
- If you don't finish your course, you still owe the money.
Loans are interest free…
- As long as you are living and working in New Zealand, you only have to pay back the money you borrowed and no interest on top of the loan figure.
But they need to be repaid……
- You can start repaying your loan as early as you like
- Once you start earning more than the current $19,448 /year ($374/week) threshold, you must repay 12 cents in every dollar over the threshold.
- This is automatically taken from your pay
- Eg - you earn $600 before tax, $226 over the threshold; you repay $226 x 12% = $27.12 off your loan.
The rules changes if you travel…
- If you travel out of NZ for > 6 months (183 days) you will get charged interest on your total loan value from when you left NZ, including the six months you've been away
- Current interest rate is 4.3%
- You must make two payments each year in March and September
- The amount you must pay each six months depends on the size of your loan:
- $1,000 - $15,000 = 2 x $500 payments
- $15,000 - $30,000 = 2 x $1,000 payments
- $30,000 - $45,000 = 2 x $1,500 payments
- $45,000 - $60,000 = 2 x $2,000 payments
- Over $65,000 = 2 x $2,500 payments
- Missed repayments are added to the loan total