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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