By Blair Pedersen, OrbitRemit
How to repay a New Zealand student loan from overseas
If you’ve been to university, trade school or a technical college, you’ll know all about student loans. For those of you that haven’t had any post-secondary school education, a student loan is the governments way of making education easy and accessible. They loan you the money to pay for school fees and then once you’re upskilled and are in the workforce, you pay it back; interest free.
All workers in New Zealand have their student loan repayments deducted from their salary every week. When you enter the workforce after finishing training, the tax code ‘MSL’ sees to this.
If you’re anything like me, you look at your student loan balance every week and cringe. Fortunately, I’m nearly there. There are many of us out there that are not even close and are ready to hang up the career for a while to see the world. This article is for those that are leaving New Zealand and want to know how to repay a New Zealand student loan from overseas.
What happens to your student loan when you move to another country?
In New Zealand we are fortunate to have interest free student loans. They’re for the greater good of the country. You can go to the training institution of your choice, study for as long as you like, and you won’t have to pay for anything up front. The government will front the bill and then you’ll work to square them up for the next few years, or decades depending on your loan size. Unlike a bank loan, if you’re in New Zealand, you won’t have to pay a cent of interest!
This all changes when you move overseas. According to the IRD website you will start accruing interest on your student loan after 6 months out of the country, unless you live in Niue, Tokelau, Cook Islands or the Ross Dependency. There are other special circumstances that exempt you from having to make a payment, like if you’re accompanying a partner for study or for work.
Will your student loan be written off when you’re living abroad?
Most certainly not. The IRD needs that money as it’s an investment in the future of our wonderful country. You were an investment and eventually if you’re not already, you’ll contribute to the growth of the country. Therefore, you will not be able to write off your student loan while overseas, even if you declare yourself bankrupt.
How much do you have to pay on your student loan when you’re working abroad?
Every year on the 31st of March you are required to make your annual repayment, this is the end of the tax year. Your student loan repayment obligation depends on the size of your loan. There are also repayment thresholds that will determine the sum that you are required to pay. Use this link to visit the student loan repayment calculator on the Inland Revenue site. The myIR secure online service can also provide you with a swathe of information regarding your student loan account.
Repayment amounts may vary, but the interest rates are fixed at 4%. Visit IRD.govt.nz to learn more about interest rates on New Zealand Student loans.
How can you repay your New Zealand student loan when you’re living abroad?
Once you’ve finished calculating your student loan obligation, you’ll need to choose between the many money transfer services available. New Zealand student loan repayments are costly enough so you’re going to want a transfer service that is free of charge.
OrbitRemit is a New Zealand based online money transfer company that works directly with IRD to make sure your payments are received fast and fee free. Furthermore, OrbitRemit is the longest standing, most trusted international money transfer partner of the IRD with millions of payments facilitated over a ten-year period. They’ll make sure that your payment gets there on time.