Student Loan Repayments

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Forums › Finance and wealth management › Student Loan Repayments

in2win

1 post

Wannabe Geek

#97642 18-Feb-2012 12:31

Hi all,

Background:

I'm now 2.5 years post Uni, all of which I have been living overseas not paying my student loan (approx 45k). I am now at the point where I can almost fully repay my debt.

Question:

Is there any way that I can cut a deal with the NZ government to waive any penalties and interest I have incurred in honour of full payment up front? And how would I go about this? Or am I dreaming?

Any info would be greatly appreciated

in2win

bvidulich

58 posts

Master Geek

#583158 18-Feb-2012 13:05

It looks like you can get the 10% voluntary repayment bonus, but you will still have to pay off the interest.

Source: http://www.ird.govt.nz/studentloans/overseas/making-payments/

garvani

1873 posts

Uber Geek

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#583164 18-Feb-2012 13:14

in2win: Hi all,

Background:

I'm now 2.5 years post Uni, all of which I have been living overseas not paying my student loan (approx 45k). I am now at the point where I can almost fully repay my debt.

Question:

Is there any way that I can cut a deal with the NZ government to waive any penalties and interest I have incurred in honour of full payment up front? And how would I go about this? Or am I dreaming?

Any info would be greatly appreciated

in2win

Completely off topic. But what on earth are you doing and where that you can afford to pay back $45k after living expenses etc in just 2.5 years!?
At my current rate im not going to have paid back my student loan till 2016 and ive been at it for 7 years already and it was 3/4 the size of yours.. ahhh living the dream here in nz with crap wages!

KevinL

656 posts

Ultimate Geek

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#583168 18-Feb-2012 13:19

The IRD had an amnesty in 2008 for overseas borrowers (http://www.ird.govt.nz/aboutir/media-centre/media-releases/2008/media-release-2008-03-19.html) - essentially it allowed for a 3 year repayment holiday, and/or waiver of any existing late payment penalties. However, as far as I'm aware it was passed in legislation and no current amnesty system applies.

There are certain circumstances where you can have an interest-free student loan while living overseas (http://www.ird.govt.nz/studentloans/overseas/interest-free/) - but if these situations don't apply to you, then you'll probably have to wear the interest/penalty payment.

For what it's worth, the interest rate is 6.6%, plus penalty payments of 1.5% per month (on the overdue amount only, not the entire balance). So the 10% early repayment bonus (http://www.ird.govt.nz/studentloans/payments/voluntary/bonus/sl-voluntary-repayment-bonus.html) ought to cover the interest/penalty payments over the last 2 1/2 years. It's a pretty simple process - if you are repaying in full, you pay 10/11th of the remaining balance and then give them a call to let them know to apply the bonus.

vinnieg

2260 posts

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#583177 18-Feb-2012 13:34

garvani:
Completely off topic. But what on earth are you doing and where that you can afford to pay back $45k after living expenses etc in just 2.5 years!?
At my current rate im not going to have paid back my student loan till 2016 and ive been at it for 7 years already and it was 3/4 the size of yours.. ahhh living the dream here in nz with crap wages!

Haha, London, Melbourne, Sydney, any major city with a sys admin or above role :)

In saying that, mine will be gone next month, but that took me 6 years, as well as paying my mortgage, @36k for the loan @ minimum payment rates

I have moved across the ditch. Now residing in Melbourne as a VOIP/Video Technical Trainer/Engineer.

stuartgr

163 posts

Master Geek

Lifetime subscriber

#583185 18-Feb-2012 13:58

The best idea is to just call up IRD and talk to them. When I returned from overseas I called them up and let them know I had missed a couple of payments on my loan, but I was back in NZ paying tax now. They advised they would waive the outstanding payments and just allow me to continue paying back the loan as per normal.

In your case if you are offering to pay off the balance, I am sure they will consider waiving any penalties. Interest on the other hand...maybe not.

k14

629 posts

Ultimate Geek

#583201 18-Feb-2012 14:55

KevinL: For what it's worth, the interest rate is 6.6%, plus penalty payments of 1.5% per month (on the overdue amount only, not the entire balance). So the 10% early repayment bonus (http://www.ird.govt.nz/studentloans/payments/voluntary/bonus/sl-voluntary-repayment-bonus.html) ought to cover the interest/penalty payments over the last 2 1/2 years. It's a pretty simple process - if you are repaying in full, you pay 10/11th of the remaining balance and then give them a call to let them know to apply the bonus.

Are you sure about that? I paid my loan off in a lump sum 3 years ago and I had to pay the balance back in full and then at the end of the financial year I got a refund for the extra amount I paid. It may have changed because it was a bit of a pain seeing I paid it off in June and had to wait till May the following year to get the $$ back.

martyyn

1971 posts

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#583244 18-Feb-2012 17:24

I wont go into any details, but I will just say this. If you have the money, phone them, tell them, and pay them.

Nine months of my life was spent fighting the IRD over our student loans and its was the most hellish time of my life.

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Jaxson

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#583253 18-Feb-2012 17:48

garvani: living the dream here in nz with crap wages!

Amen!

mattwnz

20147 posts

Uber Geek

#583267 18-Feb-2012 18:24

Jaxson:
garvani: living the dream here in nz with crap wages!
Amen!

One thing to note, is that in the last 3-5 years the NZ exchange rate has got worse for those bringing back money into the country. So if you were in the UK 5 years ago, you could get $3 NZ for every 1 pound you earnt after conversion. Now it is more like $1.80 for every pound. This makes going overseas and earning more to pay off a NZ debt take a lot longer. So good on the OP for making enough to pay it off after just 2.5 years. Perhaps that is what the government want people to do, go overseas, and then pay it off quickly. Interest is just a cost of doing it this way.

KevinL

656 posts

Ultimate Geek

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#583297 18-Feb-2012 21:06

k14:
KevinL: For what it's worth, the interest rate is 6.6%, plus penalty payments of 1.5% per month (on the overdue amount only, not the entire balance). So the 10% early repayment bonus (http://www.ird.govt.nz/studentloans/payments/voluntary/bonus/sl-voluntary-repayment-bonus.html) ought to cover the interest/penalty payments over the last 2 1/2 years. It's a pretty simple process - if you are repaying in full, you pay 10/11th of the remaining balance and then give them a call to let them know to apply the bonus.

Are you sure about that? I paid my loan off in a lump sum 3 years ago and I had to pay the balance back in full and then at the end of the financial year I got a refund for the extra amount I paid. It may have changed because it was a bit of a pain seeing I paid it off in June and had to wait till May the following year to get the $$ back.

Yep, I'm sure - that's how I finally paid off my student loan last year. It took a few weeks for my new tax code to kick in, though, so I got a refund a couple weeks later.

You can pay the entire balance, then apply for a refund for the extra amount, they don't really mind. I hate giving the IRD money when I don't have to though :-)

(80k student loan, paid about 20k off in the first six months prior to the interest free rule kicking in; then paid the minimum obligation for 7 years before finally deciding to clear off the balance - probably would have kept paying the minimum were it not for the repayment bonus)

Kyanar

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#583840 20-Feb-2012 12:43

For all of you talking about the voluntary repayment bonus - stop now. The voluntary repayment bonus only applies if you are up to date on payments and are paying over and above your repayment requirements. So essentially the OP can pay off the arrears, and then receive the voluntary repayment bonus on the amount that isn't due yet. You are probably better off paying the entire amount, then letting IRD refund the overpayment.

jpwise

590 posts

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Lifetime subscriber

#584078 20-Feb-2012 18:15

Initially i'd be inclined to get a statement from them asking how much you owe. It's also a question of when (and if) they've tagged you as being overseas. It's been a long time since i looked into student loans, but if they still have you listed as NZ resident you may be able to skirt around the issue of back interest and just pay up the whole lot, it's a long shot however, and as others have said you really don't want to mess around with the IRD.

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