If you are like most people who attended a New Zealand University or Polytechnic to further your education, then it is more than likely that you own a Student Loan. At the time you probably didn’t think about where the money came from or if you’d ever end up paying the large debt back (nor did you probably care)…Here’s how to make a few repayments to your Student Loan…

Compulsory Payments

If you are employed and receive an annual salary or wage of NZD$19,084 or over for the tax year 1 April 2009 – 31 March 2010, then you must make compulsory payments to your New Zealand student loan. The repayments come directly from your pay because you will choose a different tax code when you first begin your job. If you are still studying and earning this amount, you must still make repayments.

Your Student Loan repayments are worked out at 10 cents for every dollar of taxable income you earn above $19,084.

Travelling Overseas

If you are travelling or working overseas for 6 months or more, you are entitled to take a Repayment Holiday from your New Zealand student loan for up to 3 years. This means that you don’t have to make any payments while you’re away. However just remember that you will still earn interest on your loan so it is wise to make voluntary repayments or keep paying compulsory payments while you are away.

Voluntary Repayments

If you decide to repay your student loan quicker, you can make Voluntary Repayments in additional to your standard compulsory repayments.

The New Zealand Government has introduced a 10% student loan voluntary repayment bonus for voluntary repayments made by you which total $500 or more in a tax year (1 April to 31 March). This will only apply to voluntary repayments made from 1 April 2009 and your voluntary repayment must be additional to your standard compulsory repayments.

Your loan balance will be reduced by a further 10% of your voluntary repayments. This means that if you make voluntary repayments that come to $500, you would receive a voluntary repayment bonus of $50 and your loan balance would be reduced by $550.

You don’t need to make the repayment in one lump sum either – you could make voluntary weekly payments of $10 through one tax year – which is pretty affordable don’t you reckon – and you will still be eligible for the 10% bonus.


A smart way to make voluntary repayments to your Student Loan is to place your wages into a high interest savings bank account where you will earn interest on your money. Think of this as investment for a Voluntary Payment at the end of the financial year.

Shop around for a competitive interest rate and take note that quite often internet savings accounts offer a better investment rate than branch-based savings accounts – so you’ll get more bang for your buck!

Buying and selling property is another smart option for paying off your student loan. Not everyone will be able to achieve this goal, but consider this form of investment as a repayment option too.

Tax Rebate

If you are lucky enough to receive an Income Tax rebate at the end of the financial year, why not consider putting the sum towards your Student Loan as a Voluntary Repayment. Sure it would be nice to put the money towards new accessories for your car, travel or get a new wardrobe with the money, but think of that 10% discount and the long term benefits of Voluntary Repayments.

Every Little Bit Helps

Even if you can only afford to put $10 aside every month, every dollar helps towards your voluntary repayments and will reduce the size of your Student Loan. Just because money is tight it doesn’t mean that you can’t get rid of that Student Loan debt.

How To Pay Off Your Student Loan, 5.0 out of 5 based on 1 rating



  1. Matt says:

    Does the IRD ever make deals with people to reduce the amount of the loan if paid off in one lump sum on top of the 10% discount?

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