Plain language law

New Zealand law explained for everyone

Student Loan Scheme Act 2011

Interest, relief, penalties and offences, rights of objection, and rights to challenge - Interest - Loan interest charged for all overseas-based borrowers

134: Loan interest charged for all overseas-based borrowers

You could also call this:

“People who study in NZ and move overseas must pay interest on their student loans”

If you borrow money for your studies and then go overseas, you need to pay interest on your loan. This happens every day that you still owe money and are living outside of New Zealand.

The amount of interest you pay is worked out using a special sum. You take the amount you owe, multiply it by the interest rate, and then divide it by 365. This gives you the interest for one day.

In years with an extra day (leap years), the sum changes a little bit. Instead of dividing by 365, you divide by 366.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3818801.

Topics:
Education and learning > Higher education Money and consumer rights > Banking and loans
Previous

133: No interest applied to student loans except as specified in this Part, or

"Student loans usually don't grow with interest, except in special cases"

Next

135: Loan interest calculated daily and charged and compounded annually, or

"Interest on student loans for overseas borrowers grows daily and adds up yearly"

Part 4 Interest, relief, penalties and offences, rights of objection, and rights to challenge
Interest: Loan interest charged for all overseas-based borrowers

134Loan interest charged for all overseas-based borrowers

  1. A borrower is liable to pay loan interest on his or her loan balance for each day—

  2. that the borrower has a loan balance; and
    1. that the borrower is overseas-based.

      1. Loan interest must be calculated in accordance with the formula (except as provided in subsection (3))—

        a = b × c ÷ 365

        Where:

        • a a

          is the loan interest

        • b b

          is the borrower's loan balance on the relevant day

        • c c

          is the base interest rate.

      2. If a tax year includes an extra day because of a leap year, the reference to 365 in the formula in subsection (2) must be treated as if it were a reference to 366.

      Notes
      • Section 134 heading: replaced, on , by section 120(1) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
      • Section 134(1): replaced, on , by section 120(2) of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Act 2019 (2019 No 33).
      • Section 134(2): amended, on , by section 23(1) of the Student Loan Scheme Amendment Act 2013 (2013 No 10).
      • Section 134(3): inserted, on , by section 23(2) of the Student Loan Scheme Amendment Act 2013 (2013 No 10).