NZ Student Loan Repayment Threshold: $24,128, 12% Rate

Most New Zealanders with a student loan have repayments automatically deducted from their pay each payday. For 2026-27 (1 April 2026 to 31 March 2027), the repayment threshold is $24,128 per year, unchanged from 2025-26, with a 12% repayment rate on income above that amount. This article explains how repayments are calculated, what overseas borrowers pay, and the key rules for anyone with an outstanding balance.

The 2026-27 Repayment Threshold

Overseas-based borrowers pay interest at a rate Inland Revenue sets each tax year (see below).

The threshold has not changed since 1 April 2024. It rose from $22,828 (2023-24) to $24,128 (2024-25) under the Student Loan Scheme (Repayment Threshold for 2024-25 Tax Year and Subsequent Tax Years) Regulations 2023, which set $24,128 for 2024-25 “and subsequent tax years”, so it stays at $24,128 for 2026-27 until a new regulation replaces it. The weekly equivalent is $464 ($24,128 ÷ 52), and the fortnightly equivalent is $928.

How Repayments Are Calculated

Student loan repayments are deducted at 12% of income above the threshold (the same in 2025-26 and 2026-27). The threshold works as a deduction from your gross income before the repayment rate is applied.

Annual calculation

Repayment = (Annual income − $24,128) × 12%

Pay period calculation

In practice, your employer deducts repayments each pay period based on your gross pay for that period, not your annual projection. The tax code suffix SL is added to your code (e.g., M SL or ME SL) to tell your employer to deduct student loan repayments.

For a fortnightly pay cycle:

Repayment = (Fortnightly gross earnings − $928) × 12%

On a $1,500 fortnightly pay: ($1,500 − $928) × 12% = $572 × 12% = $68.64 per fortnight

Interest-Free for NZ-Based Borrowers

A critical feature of the New Zealand student loan scheme is that no interest accrues while you are a NZ-based borrower (living in New Zealand). This means your loan balance only decreases — or stays the same if you are not earning above the threshold — but never grows due to interest.

This interest-free treatment is automatic when you are living in New Zealand. You do not need to apply for it.

Overseas Borrowers

You don’t become an “overseas-based borrower” the instant you leave NZ. IRD applies a specific day-count test (a different test from NZ tax residency, see below): you stay NZ-based — and interest-free — as long as you’re physically present in New Zealand for 32 days or more within any rolling 184-day period, and you’re never absent for more than 152 consecutive days. Once you fall outside that safe harbour, you become overseas-based and interest starts accruing, backdated to the day after you left New Zealand.

The overseas-based interest rate is set annually by IRD and has risen recently:

Overseas repayment obligations

Overseas borrowers must make repayments based on their loan balance, in two equal instalments — half on or before 30 September and half on or before 31 March (Student Loan Scheme Act 2011 s 112(1)):

Overseas borrowers who fail to make repayments may have their loans put on an interest rate higher than the standard overseas-based rate as a penalty rate. IRD can also take enforcement action in some circumstances.

Returning to New Zealand

When you move back to New Zealand permanently, your loan becomes interest-free again once you have been back in New Zealand for at least 152 of 183 days (NZ-based status then runs from the first day of that period). You should notify IRD promptly and update your contact details in myIR to ensure repayments switch back to the PAYE-deduction model.

Multiple Jobs and the Threshold

If you have more than one job, the pay-period threshold only applies to your main job (M SL or ME SL); a job on a secondary SL code (such as S SL) deducts 12% of every dollar from the first dollar. Under-deduction happens when a job is not on an SL code, so neither employer deducts as much as you owe.

Example: You earn $16,000 from Job A and $14,000 from Job B ($30,000 combined). If neither employer was given your SL code and each income is below $24,128, neither deducts student loan repayments. But combined, you are $5,872 above the threshold and owe $704.64 in repayments.

In this situation IRD can send your employer a student loan extra deduction notice to catch up the missing amount. To avoid this, you can:

• Give both employers an SL code (M SL on your main job, S SL on the second), or
• Ask IRD to issue a special deduction rate to one of your employers

Voluntary Repayments and Lump Sums

You can make voluntary additional repayments at any time. These:

• Reduce your outstanding balance immediately
• Are applied to your loan and reduce the remaining debt
• Can be made via myIR bank transfer or automatic payment to IRD

There is no penalty for paying off your loan early. Many borrowers make lump-sum contributions when they receive bonuses or tax refunds to accelerate their payoff date.

What Counts as Income for Student Loan Purposes?

The repayment threshold applies to your total income from all sources, including:

• Wages and salary
• Self-employment income
• Rental income
• Interest and dividends
• Schedular payments

KiwiSaver contributions you make are not deducted before calculating student loan repayments. Your loan repayments are based on gross income (before PAYE and KiwiSaver deductions).

Repayment When You Have No Income

If you are not working — for example, on parental leave, studying, or between jobs — no repayments are required, because there is no income above the threshold. Your loan balance simply stays the same (with no interest accruing if you are NZ-based). There is no minimum repayment requirement for NZ-based borrowers with no income.

Checking Your Balance and Repayments

You can check your current student loan balance and repayment history at any time through myIR at ird.govt.nz/myir. Your annual tax summary shows total student loan repayments made during each year.

If you believe you have overpaid — for example, because your income fluctuated and you were over-deducted — IRD will refund any excess via your tax refund at year end.

New Borrowers in 2026-27

New student loans are only available for approved study at recognised institutions. Key conditions:

• Maximum loan amounts vary by course and living circumstances
• Loans for course fees are paid directly to the institution by StudyLink
• Living cost component is paid to the student
• No interest while you remain NZ-based

The threshold and 12% repayment rate apply to new borrowers the same as all others. Repayments through PAYE begin as soon as your earnings exceed $464 per week (the weekly threshold equivalent).

Summary

For 2026-27, NZ student loan repayments work as follows:

• Threshold: $24,128 per year ($464 per week, $928 per fortnight), unchanged since 1 April 2024
• Rate: 12% on income above the threshold
• Interest: 0% for NZ-based borrowers; 5.6% per annum for overseas borrowers in 2026-27 (4.9% in 2025-26)
• Overseas repayments: Fixed by loan balance ($1,000 to $5,000 a year), due in two equal instalments per year (30 September and 31 March)
• Multiple jobs: Can cause under-deduction — check via myIR at year end

Use the Student Loan Calculator on this site to estimate your weekly repayments based on your income.