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Student Loan Scheme Act 2011

Interest, relief, penalties and offences, rights of objection, and rights to challenge - Interest - Late payment interest

139: Late payment interest charged on unpaid amount

You could also call this:

"Extra charges for not paying your student loan on time"

If you owe $334 or more on your student loan, you might have to pay extra money called late payment interest. This happens when you don't pay on time.

The government calculates this extra money in two ways. First, they multiply the amount you owe by a special rate on the day after you were supposed to pay. Then, every month after that, they do the same thing again with whatever you still owe.

The rate they use to figure out the late payment interest is a bit complicated. They take something called the base interest rate and add 4% to it. Then they change it into a monthly rate and round it to three decimal places.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM3885565.

Topics:
Education and learning > Higher educationMoney and consumer rights > Banking and loans
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138: Loan interest written off for quick repayment of consolidated loan balance, or

"You might not have to pay interest if you quickly pay off your student loan after returning to New Zealand"

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140: Notification of late payment interest, or

"You'll be told if you have to pay extra for being late with your student loan"

Part 4Interest, relief, penalties and offences, rights of objection, and rights to challenge
Interest: Late payment interest

139Late payment interest charged on unpaid amount

  1. A borrower is liable to pay late payment interest on each unpaid amount if that unpaid amount is $334 or more (or any other level prescribed by regulations).

  2. Late payment interest is calculated, charged, and added to a borrower's unpaid amount as follows:

  3. the late payment interest rate multiplied by the unpaid amount on the day after its due date; and
    1. the late payment interest rate multiplied by the unpaid amount as at each day that falls 1 month after the day on which late payment interest is imposed under paragraph (a) or under this paragraph.

      1. In this section, late payment interest rate means the base interest rate plus 4%, calculated as an equivalent monthly rate expressed as a percentage and truncated to 3 decimal places.

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      Notes
      • Section 139(2)(a): amended, on (applying for 2013–14 and later tax years), by section 58(1) of the Student Loan Scheme Amendment Act 2013 (2013 No 10).
      • Section 139(2)(b): amended, on (applying for 2013–14 and later tax years), by section 58(1) of the Student Loan Scheme Amendment Act 2013 (2013 No 10).
      • Section 139(3): inserted, on (applying for 2013–14 and later tax years), by section 58(2) of the Student Loan Scheme Amendment Act 2013 (2013 No 10).