Student Loan changes
1 April marks new era for student loans
As from 1 April no further interest will be charged on student loans for those who live in New Zealand, Students who borrow from that date will only have to repay what they borrow. In addition those with existing loans will not be charged any further interest. This means that no more will students and graduates have the compounding cost of interest provided they remain in New Zealand so it should knock years off repayment times. However those with student loans who travel overseas to work will still have to pay interest. The change is designed to encourage them to stay in New Zealand or to return more quickly to contribute to our economy and society. Background
•Interest free loans will be delivered by an interest write-off. This means interest will still be charged and appear on statements. However, if a borrower is eligible, this interest will be written off after the end of the tax year (31 March).
•Only the interest charged after 1 April 2006 will be written off under interest free student loans. The new legislation does not cover interest charged before this time.
•The first interest write-offs will happen in April 2007.
Eligibility
•To be eligible, student loan borrowers - whether they are still studying or not - need to be living in New Zealand for 183 or more consecutive days (about six months).
•Borrowers who live overseas are not eligible for interest free student loans unless they are granted an exemption (see below for details).
•Borrowers who have met the 183-day requirement, then leave New Zealand for 184 or more consecutive days, will lose their eligibility. This means interest charged from the day after they leave New Zealand will not be written off.
•Borrowers living overseas, who then return to New Zealand, will become eligible for an interest free student loan once they have been back for 183 or more consecutive days (about six months). This means the interest charged from the date they return will be written off.
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