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Student loans in New Zealand are a critical topic as getting a degree from a college or a university often costs a lot and higher institutions in New Zealand are no exception. This is why different types of student loans exist, to help ease the financial burden.
These loans are usually granted to students studying eligible courses, i.e. courses that are approved for student loans, and there is a limit to the number of student loans that you can get in your lifetime.
Whether you are an international student looking for financial assistance or a local student who can’t afford his/her educational expenses, the first step towards making the right decision when it comes to student loans is to find out everything you can about how they work in Switzerland.
You need to conduct thorough research regarding the rules that apply to student loan applications, how and when you are expected to start repaying your student loan debt, the interest rates that apply to student loans, and the schools and courses approved for student loans.
Take your time to read and digest this article, as it may just be exactly what you need to prepare you for the journey you are about to embark on.
What is the Student Loan Scheme?
Introduced in New Zealand in 1992, the Student Loan Scheme (SLS) was designed to offer student loans and allowances to cater for course fees and other educational expenses to students in higher education schools. This is usually dependent on whether they meet funding criteria set by StudyLink.
What is StudyLink?
This is the public organization part of the Ministry for Social Development that is in charge of disbursing student loans and allowances. When you apply for a student loan, this is the body that determines if you get it or not.
How do I Receive my Student Loan?
Once StudyLink approves your student loan application, the approved amount is paid directly to your school.
How Do Student Loan Repayments Work?
Whether you’re still in school or you’ve graduated, you are not required to begin the repayment of your student loan debts until you begin to earn up to $22,828 a year before tax.
You are expected to pay 12% of any amount that you earn above this set figure ($22,828).
This translates to 12% on any income beyond the $439 weekly pre-tax repayment threshold.
While StudyLink is in charge of approving student loans, repayments are handled by the Inland Revenue Department (IRD). You can access your information through the organization’s myIR account.
Also, no interest will be charged on your student loan debts, as long as you work and live in England.
For further insight into student loans, kindly see this.
What Are Student Loan Entitlements?
Four different student loan entitlements are granted based on a student’s needs. You don’t have to apply for these entitlements separately, all applications can be done at once. They are:
1. Student Loan tuition fees: When you apply for a student loan, it usually covers the totality of your tuition fees.
2. Student Loan course-related costs: Like your tuition fees, this is usually added to your student loan balance and you can receive up to $1,000 every 52 weeks. Both full-time and part-time students are eligible.
3. Student Loan living costs: As a full-time student, you can apply to get up to $302.32 every week all through the duration of your study.
4. Student Allowance: The amount of allowance that a student receives depends on his/her background. If you are not up to the age of 24, the amount you will receive depends on your parents’ earnings.
Schools Eligible For Student Loans in New Zealand
- Auckland University of Technology.
- The University of Auckland.
- The University of Wellington.
- The University of Otago.
- Massey University.
Difference Between Student Loans and Normal Loans in New Zealand
In New Zealand, student loans work differently than other types of loans. The rules that apply to normal loans don’t apply to them. Below are some distinct differences between them:
1. Unlike normal loans, student loans don’t require repayment until you start earning above a set amount.
2. Student loans are usually interest-free as long as the borrower works and lives in New Zealand.
3. Unlike normal loans, student loans in New Zealand don’t affect your credit score, since they won’t appear on your credit history.
4. Student loans are usually repaid through the income tax system.
5. When it comes to repayment, the amount that is expected from you is dependent on how much you earn. This means that as your earnings go up, so does your repayment amount, and as it falls, so does the amount you’ll pay.
6. Debt collectors don’t hound you for the rest of your loan payment.
What Happens if I Travel Abroad?
As we’ve said before, student loans in New Zealand are usually interest-free as long as you don’t leave the country. However, if you do leave the country while you’re still owing student loans, there are some consequences to face.
If you travel abroad and spend less than six months, your loan will remain interest-free but if you travel abroad for more than that, not only will the current interest rate apply to your student loan, it will be calculated starting from the day you left the country.
The interest rate at the moment is 2.90% yearly and your repayment will be between $500 and $2,500 every six months, depending on how much you owe.
How Do I Apply For A Student Loan?
Once you’ve decided that taking a student loan is the right move for you, below are steps to take to make it a reality:
1. The first step is to take the eligibility test which usually requires certain information. With this, you can find out if you qualify and how much you are entitled to.
2. Once you’ve taken the eligibility test, the next step is to apply for the loan. Further information will be requested for, including whether you want only tuition fees or a loan that covers living expenses and/or course-related costs.
3. Once that has been resolved, you should get a response in a matter of days.
4. If approved, you’ll be required to sign a student loan contract and StudyLink will activate your student loan. You will then have an online account where you can view all transactions and the balance you are owing.
Who Is Eligible For A Student Loan In New Zealand?
To be eligible for a student loan in New Zealand, you need to meet certain requirements.
1. If you’re below 18 years of age, you will need your parent’s consent before you can get a student loan.
2. You must be a New Zealand citizen or a resident who has resided in the country for a minimum of 3 years and possessed a residence class visa for a minimum of 3 years.
3. You must be studying a course that is approved for student loans.
Which Courses Are Approved For a Student Loan?
Some of the courses approved for a student loan include:
- Doctorate programs.
- Diploma courses.
- Skill development courses.
- Postgraduate degrees.
- Undergraduate degrees.
- Vocational courses.
Student Loans For International Students In New Zealand
Studying abroad can cost quite a lot and this often necessitates the need for student loans.
After deciding on which higher education school to attend and the course to study, International students who need to obtain a student loan to study in New Zealand should take the following steps:
1. Research the loan options available for international students.
2. Find out the eligibility criteria of these loan options.
3. Find out the documents that you would need to submit when applying.
4. Have a clear estimation of how much you would need to borrow.
5. Get an enrollment letter from the admission office of the school that you would be attending.
6. Compare the available loan options and pick the one that you think is best for you.
7. After picking which bank to borrow from and the amount that you want to borrow, fill out and submit an application form.
8. If your loan application is approved, you will get a loan document that states the terms and conditions of the loan.
9. Sign the document and receive the loan amount that you’ve applied for.
What Are The Eligibility Criteria To Apply For International Student Loans?
Although different banks have their own personal eligibility criteria, there are are some that they all have in common. In general, an international student who wants to apply for a student loan must:
- Be over 18 years.
- Be enrolled in the University of New Zealand.
- Be enrolled in a professional or technical program of studies.
- Have excellent educational records.
Armed with ample information regarding All you need to know about student loans in New Zealand, we believe navigating the borrowing process should be a cakewalk.