Student loan repayments in New Zealand are collected through the same PAYE system as income tax — your employer deducts them automatically, provided you have added SL to your tax code. Understanding repayment rates, the income threshold, and what happens if you go overseas is essential for managing your student loan efficiently.
Student loan repayments are deducted at 12 cents per dollar of main-job pay above $24,128/year ($464/week), a threshold unchanged for the 2026–27 tax year; pay from a secondary job has repayments deducted from the first dollar. Add "SL" to your tax code (e.g., M SL) so your employer deducts repayments automatically. Interest-free while you are NZ-based. If you become overseas-based (in NZ 31 days or less in a 184-day period), interest applies: IRD's rate is 5.6% a year from 1 April 2026 (up from 4.9%). Repayments are also collected through your IR3 if you have non-PAYE income.
How Student Loan Repayments Work
NZ student loans are interest-free for NZ-based borrowers. Repayments are collected through:
- PAYE — deducted from wages by your employer
- IR3 — through your annual tax return if you have self-employment, rental, or other income
Your student loan balance does not appear on your payslip as a separate debt — it is managed through IRD, and repayments are simply deducted before you receive your net pay.
Repayment Threshold and Rate (2026–27)
| Amount | |
|---|---|
| Annual repayment threshold | $24,128 |
| Weekly equivalent | $464/week |
| Repayment rate | 12 cents per dollar of main-job pay above the threshold |
The threshold applies only to your main job. Pay from a secondary job has repayments deducted at 12% from the first dollar, because the threshold has already been used for your main job (IRD: repaying when I earn salary or wages).
This threshold has been frozen at $24,128 since 2024–25 and remains unchanged for 2026–27.
Example: You earn $50,000/year.
- Income above threshold: $50,000 − $24,128 = $25,872
- Annual repayment: $25,872 × 12% = $3,105
- Weekly repayment: approximately $59.71/week
Your Tax Code and Student Loan
To have your employer deduct student loan repayments, you must add SL to your tax code on your IR330:
| Situation | Tax code |
|---|---|
| Main job, no IETC, with student loan | M SL |
| Main job, IETC eligible, with student loan | ME SL |
| Second job, $53,501–$78,100 combined, with loan | SH SL |
If you forget to add SL, your employer will not deduct repayments. You will have a student loan repayment obligation at year end via your income tax assessment — and may be in under-repayment if this continues.
Interest on Student Loans
NZ-based borrowers: No interest charges while you live and work in New Zealand. IRD does charge a $40 administration fee if your balance is $20 or more at 31 March, and may charge late payment interest if you pay late.
Overseas-based borrowers: Interest applies: IRD’s rate is 5.6% a year from 1 April 2026, up from 4.9% in 2025–26 (IRD: student loan interest and fees). It is calculated daily and added to your loan at the end of the year. You are overseas-based if you are in NZ for 31 days or less in a 184-day period.
Going overseas? The interest charges can be significant on a large loan balance. IRD requires overseas-based borrowers to make overseas-based repayments — a compulsory amount based on your loan balance, regardless of what you earn.
Overseas-Based Repayments
If you move overseas, IRD expects repayments even if you have no NZ income. You pay them yourself: IRD sends an assessment notice each year with the minimum amounts, generally due by 30 September and 31 March, based on your loan balance (IRD: repaying when I live overseas):
| Loan balance | Amount by 30 September | Total by 31 March |
|---|---|---|
| Under $1,000 | Half your balance | The remaining half |
| $1,000–$15,000 | $500 | $1,000 |
| $15,000–$30,000 | $1,000 | $2,000 |
| $30,000–$45,000 | $1,500 | $3,000 |
| $45,000–$60,000 | $2,000 | $4,000 |
| Over $60,000 | $2,500 | $5,000 |
See Overseas Student Loan Repayment NZ for the full 30 September / 31 March split.
Failing to make overseas repayments results in interest, penalties, and IRD can take legal action. Always notify IRD before leaving NZ for an extended period.
Temporary Repayment Suspension
If you are overseas-based, you can ask IRD for a temporary repayment suspension, which pauses your overseas-based payments for up to 12 months while you travel overseas.
IRD says to let it know either before you go overseas or within 6 months of leaving. You can apply in myIR under the “Travelling overseas” section of your student loan account.
Repayments Through IR3
If you earn income other than PAYE (rental, self-employment), IRD assesses an additional student loan repayment obligation through your IR3. This is calculated at 12 cents per dollar of non-PAYE income above the threshold (combined with your PAYE income already considered).
Self-employed people may also need to pay student loan through provisional tax instalments if their combined annual repayment obligation is significant.
Frequently Asked Questions
How long will it take to repay my student loan?
It depends on your balance, income, and whether you make voluntary extra repayments. At $50,000 income, repayments of ~$3,105/year mean a $40,000 loan takes approximately 13 years at standard repayments (no voluntary extras, no interest as NZ-based). Voluntary extra payments can dramatically accelerate this.
Can I make extra repayments?
Yes. You can make one-off payments to IRD when you can, or ask your employer to make extra repayments from your pay on top of your standard deductions (IRD: extra repayments). Extra repayments reduce your balance and shorten the repayment period.
I got a new job after not working. Do I need to update my tax code?
Yes. Give your new employer an IR330 with your current tax code including SL. If you have been out of the workforce, your loan balance may have grown from administration fees — check myIR for your current balance.
Does my student loan balance affect my credit rating?
Student loans are not reported to credit bureaus in the same way as commercial debt. However, IRD can take enforcement action (garnishment, charging orders) for significant overdue repayments, which may have knock-on credit impacts.