If you took out a New Zealand student loan and moved overseas, your repayment obligations change significantly. Unlike NZ-based borrowers who repay via automatic PAYE deductions, overseas borrowers must make their own repayments directly to IRD — and are charged interest, unlike NZ-based borrowers.
NZ student loans are interest-free while you are tax-resident in New Zealand. Once you are overseas-based (in NZ 31 days or less in a 184-day period), interest starts accruing on your loan: currently 5.6% per year from 1 April 2026 (up from 4.9% in 2025–26). You make repayments yourself, directly to IRD. Inland Revenue says your repayments are based on your loan balance when you become overseas-based, not your total income, with payments generally due by 30 September and 31 March. Failure to repay leads to serious consequences including arrest warrants at the NZ border and penalties.
When Does Overseas Repayment Apply?
You become an overseas-based borrower when you have been in New Zealand for 31 days or less in a 184-day period. At this point:
- Your loan starts accruing interest
- You must make repayments directly to IRD (not through PAYE)
- IRD may apply penalties if you do not meet repayment obligations
184-day period: IRD looks at how many days you were in New Zealand within a 184-day period. If you were here for 32 days or more you are a New Zealand-based borrower.
Interest Rate on Overseas Loans
NZ-based borrowers: 0% interest (interest-free since 2006)
Overseas-based borrowers: interest is charged at a rate set annually on 1 April:
| Year | Overseas borrower interest rate |
|---|---|
| 2024–25 | 3.3% |
| 2025–26 | 4.9% |
| 2026–27 | 5.6% |
Interest accrues daily on your outstanding balance (5.6% works out to a daily rate of about 0.01534%). A $30,000 loan at 5.6% generates approximately $1,680 in interest per year — meaning if your repayments don’t cover the interest, your balance grows. IRD has noted that at the current rate, a loan balance over roughly $89,000 will generate more interest per year than the standard repayment covers.
Repayment Obligations
Standard Repayment Amounts
Overseas borrowers are required to make repayments every six months (by 30 September and 31 March each year). Standard repayment amounts:
| Loan balance | By 30 September | Total by 31 March |
|---|---|---|
| Under $1,000 | Half the balance | 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 |
Note: These are minimum amounts. You can pay more at any time with no penalty.
If You Cannot Afford the Repayments
Inland Revenue says overseas-based repayments are based on your loan balance, not your total income. If you can’t afford your repayments, contact Inland Revenue about your options before a payment is missed.
How to Make Repayments from Overseas
Payment options available from overseas:
| Method | Details |
|---|---|
| myIR online transfer | Bank transfer via myIR — SWIFT/international bank transfer |
| Credit or debit card via myIR | IRD accepts Visa and Mastercard |
| Direct debit (if you have an NZ bank account) | Set up via myIR |
| Western Union | Available in many countries |
IRD’s bank details for international transfers:
- Bank: ANZ Bank New Zealand
- Account name: Inland Revenue
- Include your IRD number as the payment reference
Always retain proof of payment. International transfers can take 3–5 business days.
What Happens If You Don’t Pay
Non-compliance by overseas borrowers is treated seriously by IRD:
| Consequence | Trigger |
|---|---|
| Late payment interest | Charged at 9.6% p.a. once the overdue amount reaches $334 or more, until you catch up |
| Contact with debt collection | IRD uses offshore agencies |
| Arrest on return to NZ | Arrest warrant issued for serious defaults — enforced at border |
The arrest warrant provision is real and enforced. IRD has an active overseas compliance programme and works with NZ Customs to flag returning borrowers with outstanding defaults.
Notifying IRD You Are Overseas
You are required to notify IRD within one month of becoming an overseas-based borrower. Do this via myIR or by contacting IRD directly. Failure to notify is itself an offence.
When you notify IRD:
- Your account switches from PAYE-based to direct repayment
- IRD sets your repayment schedule
- Interest starts accruing
Returning to New Zealand
When you return to NZ and re-establish tax residency:
- Your loan reverts to interest-free status
- Repayments switch back to PAYE (12% of income over the repayment threshold)
- Notify IRD within one month of returning
If you are planning to return permanently, timing matters — making a large voluntary repayment while overseas stops interest accruing on that portion immediately.
Frequently Asked Questions
I’ve been overseas for a few years and haven’t paid anything. What do I do?
Contact IRD proactively — this is treated as a voluntary approach and IRD is generally willing to establish a payment arrangement. The longer you wait, the more interest and penalties accrue. IRD can also pursue you through overseas tax authorities in some countries (information-sharing agreements with Australia, UK, and others).
Can I pay off my loan in full from overseas?
Yes. Request a payoff figure from IRD (interest accrues daily, so the balance changes). Pay the full amount via international bank transfer with your IRD number as reference.
Is NZ student loan interest deductible in my country of residence?
In some countries (Australia, UK, USA) foreign loan interest may be deductible — check with a tax adviser in your country of residence. NZ IRD does not provide guidance on overseas tax treatment.
I have an NZ student loan and I’m going on a working holiday. Do repayments apply?
If you are in NZ for 31 days or less in a 184-day period, you are overseas-based, so interest applies and overseas repayment obligations begin. If you are here for 32 days or more, you remain a NZ-based borrower.