Student Loan Repayment Threshold for 2025-26: Rates, Rules, and Overseas Obligations
New Zealand student loan repayment threshold for 2025-26, the 12% repayment rate, overseas borrower obligations, and what changes for new borrowers.
Published 22 March 2026 · Reviewed by NZ Tax Tools Editorial Desk
Around 700,000 New Zealanders have a student loan, and for most of them repayments are automatically deducted from their pay each payday. For 2025-26, the repayment threshold is $24,128 per year, 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 2025-26 Repayment Threshold
| Parameter | 2024-25 | 2025-26 |
|---|---|---|
| Annual repayment threshold | $24,128 | $24,128 |
| Weekly threshold | $464 | $464 |
| Fortnightly threshold | $928 | $928 |
| Repayment rate | 12% | 12% |
| Interest rate (NZ-based borrowers) | 0% | 0% |
The threshold has not changed between 2024-25 and 2025-26. The increase was from $22,828 (2023-24) to $24,128 (2024-25), and remains at $24,128 for 2025-26. The weekly equivalent of $24,128 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 threshold works as a deduction from your gross income before the repayment rate is applied.
Annual calculation
Repayment = (Annual income − $24,128) × 12%
| Annual income | Income above threshold | Annual repayment |
|---|---|---|
| $24,128 | $0 | $0 |
| $30,000 | $5,872 | $704.64 |
| $40,000 | $15,872 | $1,904.64 |
| $50,000 | $25,872 | $3,104.64 |
| $60,000 | $35,872 | $4,304.64 |
| $80,000 | $55,872 | $6,704.64 |
| $100,000 | $75,872 | $9,104.64 |
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
If you move overseas, the interest-free treatment ends and interest begins to accrue on your outstanding balance. The 2025-26 overseas borrower position:
| Parameter | Rate |
|---|---|
| Interest rate for overseas borrowers | 3.5% per annum (as of 2025-26) |
| Compulsory repayment (overseas) | Based on your loan balance |
| Minimum repayment (small balances) | Flat dollar amounts by balance tier |
Overseas repayment obligations
Overseas borrowers must make repayments based on their loan balance at the start of the tax year:
| Loan balance | Annual repayment |
|---|---|
| Up to $1,000 | Full balance |
| $1,001 – $15,000 | $2,000 |
| $15,001 – $30,000 | $3,000 |
| $30,001 – $45,000 | $4,000 |
| $45,001 – $60,000 | $5,000 |
| Over $60,000 | $5,000 minimum (may be more) |
These repayments are due in two equal instalments: 30 September and 31 March each year.
Overseas borrowers who fail to make repayments may have their loans put on an interest rate higher than 3.5% 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 from the date you return. 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, each employer applies the threshold separately to each job’s income. This can result in under-deduction — you may not repay enough across the year because neither employer knows about the other income.
Example: You earn $16,000 from Job A and $14,000 from Job B ($30,000 combined). Because each income is below $24,128, neither employer deducts student loan repayments. But combined, you are $5,872 above the threshold and owe $704.64 in repayments.
In this situation, you will receive a notice from IRD after the end of the year requiring you to pay the shortfall. To avoid this, you can:
- File an IR3 return and include all income, 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 2025-26
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 2025-26, NZ student loan repayments work as follows:
- Threshold: $24,128 per year ($464 per week)
- Rate: 12% on income above the threshold
- Interest: 0% for NZ-based borrowers; 3.5% per annum for overseas borrowers
- Overseas repayments: Fixed by loan balance, due in two instalments per year
- 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.