NZ Student Loan Repayment 2026/27 Explained
How NZ student loan repayments work
New Zealand student loans carry no interest for NZ-based borrowers. Repayments are collected via the PAYE system from employment income, alongside income tax and the ACC levy. The repayment is calculated as 12% of every dollar earned above the annual repayment threshold of $24,128.
The threshold divides into pay periods: for a weekly-paid employee the threshold is approximately $464 per week, and for a monthly-paid employee approximately $2,011 per month. Your employer applies the threshold to the earnings in each pay period, not just once at year-end.
Repayments at common salary levels
| Annual salary | Annual repayment | Monthly repayment | Weekly repayment |
|---|---|---|---|
| $30,000 | $704.64 | $58.72 | $13.55 |
| $40,000 | $1,904.64 | $158.72 | $36.63 |
| $60,000 | $4,304.64 | $358.72 | $82.78 |
| $80,000 | $6,704.64 | $558.72 | $128.94 |
| $100,000 | $9,104.64 | $758.72 | $175.09 |
Activating student loan deductions with your employer
Complete an IR330 (Tax code declaration) form and add the "SL" suffix to your tax code before your first pay day. For a primary job the full code is M SL. If you are on the Independent Earner Tax Credit the code is ME SL. For a secondary job use S SL, SH SL or ST SL depending on your expected income from that job. Your employer is legally obliged to deduct repayments once the SL suffix is declared.
If you forget to declare SL, IRD will calculate the shortfall at year-end and you may face a penalty. It is better to start deductions immediately and apply for a temporary repayment reduction if cashflow is tight.
Overseas borrowers
Borrowers who leave New Zealand for more than six months become overseas-based. They lose the interest-free benefit and must make repayments directly to IRD based on their loan balance. The obligation is much higher than the standard 12% PAYE rate. Returning to New Zealand and updating your IRD residency status restores the interest-free status and switches repayments back to PAYE.
See student loan deductions included in the NZ PAYE calculator by ticking the student loan option.
Frequently asked questions
How do I tell my employer to deduct student loan repayments?
Add the "SL" suffix to your tax code on your IR330 (Tax code declaration) form. For a primary job the code becomes M SL instead of M, or ME SL if you use the Independent Earner Tax Credit. Hand the completed IR330 to your employer on your first day or whenever your loan balance becomes repayable. Your employer is then legally required to deduct repayments at 12% on income above the pay-period threshold.
Does student loan repayment stop once the loan is paid off?
Yes. Once your loan balance reaches zero, IRD notifies your employer and deductions stop. If your employer continues deducting after the loan is paid, you can apply for a refund through myIR or your end-of-year income tax assessment. You should also update your IR330 to remove the SL suffix once you receive confirmation from IRD that your loan is repaid.
What is the repayment rate for overseas-based borrowers?
Borrowers who are overseas for more than six months are required to make repayments directly to IRD rather than through PAYE. The overseas repayment obligation is based on loan balance in bands and is significantly higher than the 12% standard rate: for 2026/27 it ranges from $2,000 to over $7,000 per year depending on the loan balance, with an additional 2% interest charge on overdue amounts. Repayments are made directly online via myIR.
Source: Student Loan Scheme Act 2011, IRD student loan repayment thresholds 2026/27. Last updated 2026-11-04.