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Student Loan Scheme Act 2011

Matters of general application and miscellaneous matters - Matters of general application

194: Order in which certain deductions and payments offset against borrower's consolidated loan balance

You could also call this:

"How your student loan payments are used to pay off your debts"

When you pay back your student loan, the money goes towards paying off your oldest debts first. This includes any assessments, unpaid amounts, and things you're required to pay back. For each of these, the money first goes towards paying off any interest charged, and then towards the main amount you borrowed.

There are some special types of payments that can only be used to pay off your student loan, and not other debts or penalties. These include:

  1. Regular deductions from your pay that aren't much more than what you owe.
  2. Money the government takes out of your pay up to a certain amount.
  3. Money you get from the final-year fees-free scheme.

However, if your student loan is the only debt you have, these special payments can be used to pay off any part of it.

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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=DLM3885570.

Topics:
Education and learning > Higher educationMoney and consumer rights > Banking and loans
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"You must tell the student loan manager if your address changes"

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195: Date on which salary or wage deductions and payments treated as being made and credited, or

"When money is taken from your pay or given to the government for your student loan"

Part 5Matters of general application and miscellaneous matters
Matters of general application

194Order in which certain deductions and payments offset against borrower's consolidated loan balance

  1. A borrower deduction or payment received by the Commissioner in respect of a borrower’s consolidated loan balance must be offset as follows:

  2. first, against the borrower’s oldest assessments, unpaid amounts, and repayment obligations; and
    1. within each of those things, first, against any interest charged and secondly, any remainder must be offset against any principal outstanding.

      1. The following must not be used to satisfy other repayment obligations, unpaid amounts, or penalties (unless the borrower’s consolidated loan balance consists only of 1 or more of those things):

      2. a standard deduction that is not a significant over-deduction:
        1. a Commissioner deduction for the purposes of section 49(1)(a) that does not exceed the total amount specified under section 49(2)(b):
          1. an entitlement under the final-year fees-free scheme.

            Compare
            Notes
            • Section 194 heading: amended, on , by section 75(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
            • Section 194(1): replaced, on , by section 75(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
            • Section 194(2): inserted, on (applying for 2013–14 and later tax years), by section 66 of the Student Loan Scheme Amendment Act 2013 (2013 No 10).
            • Section 194(2): amended, on , by section 75(3) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
            • Section 194(2)(c): inserted (with effect on 1 January 2025), on , by section 260 of the Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures) Act 2025 (2025 No 9).