If you have a New Zealand student loan and you move overseas, your obligations change significantly. The interest-free benefit stops, mandatory repayment amounts switch to a fixed schedule, and failing to comply can result in penalties and passport issues.
• 5.6% p.a. interest applies once you're overseas-based (from 1 April 2026, up from 4.9%)
• Fixed repayment instalments required (not PAYE-based)
• You must notify IRD that you're overseas
• Defaulting can result in a repayment notice, late payment penalties, and referral to a debt collection agency
• Serious defaulters can have their NZ passport renewal blocked
When Does the Overseas Rule Apply?
You become an overseas-based borrower when you are in New Zealand for 31 days or less in a 184-day period. IRD counts your days outside NZ using border crossing data.
Interest begins from the day after you left New Zealand, not from when IRD contacts you, so don’t assume silence means there’s no issue (IRD: I am going overseas).
Your Obligations When Overseas
1. Notify IRD
You must tell IRD you’re leaving New Zealand. You can do this through MyIR online. Failing to notify IRD when required can result in penalties.
2. Make Fixed Repayments
Instead of PAYE deductions, you pay IRD yourself: minimum repayments are based on your loan balance (not your income) and are generally due by 30 September and 31 March. IRD sends you an assessment notice each year with the minimum amounts (IRD: repaying when I live overseas).
3. File IR3 Returns (If Applicable)
If you have NZ-sourced income while overseas (rental income, investment income), you still need to file a NZ income tax return.
Overseas Repayment Schedule
The fixed repayment amount depends on your outstanding loan balance:
| Balance | Annual repayment required |
|---|---|
| Under $1,000 | Full balance |
| $1,000–$15,000 | ~$1,000–$2,000/year |
| $15,001–$30,000 | ~$2,000–$3,500/year |
| $30,001–$45,000 | ~$3,500–$5,000/year |
| Over $45,000 | Higher amounts |
Check ird.govt.nz for current overseas repayment obligation amounts — updated periodically.
You can pay more than the minimum, and with interest accruing (IRD’s rate is 5.6% a year from 1 April 2026), there’s a genuine financial incentive to pay more when overseas.
What Happens If You Don’t Pay
IRD takes non-compliance by overseas borrowers seriously. The consequences escalate:
- Late payment penalty: Additional charges added to your balance
- Debt collection: IRD may refer the debt to a collection agency, which can pursue you internationally
- Passport restriction: Serious defaulters (typically owing $10,000+ and not engaging with IRD) can have their NZ passport renewal refused. This doesn’t affect your ability to leave or re-enter NZ, but you can’t renew your passport if you’re in default
Returning to New Zealand
When you return and become NZ-based again:
- Interest stops
- Your loan reverts to interest-free
- Repayments revert to PAYE-based automatic deductions
- You need to notify IRD that you’ve returned
Tips for Managing Your Loan Overseas
- Pay it off before leaving: If your balance is manageable, paying it off before moving overseas means no overseas-based interest is charged
- Continue repayments from overseas: Online banking and the MyIR portal make it easy to continue paying. Set up automatic transfers so you don’t forget
- Check your balance regularly: Log into MyIR at ird.govt.nz to see your current balance and any outstanding notices
- Contact IRD if you’re struggling: IRD has overseas debt management staff. Engaging proactively is always better than ignoring the debt