A Guide to Student Loans
Pursuing higher education is a significant investment in your future, but it often comes with substantial costs. For many students, taking out a student loan is a necessary step to cover tuition fees, course-related expenses, and living costs. This guide will walk you through the essentials of student loans, helping you understand the process, eligibility requirements, and repayment options.
What is a Student Loan?
A student loan is a type of financial aid designed to help students pay for their post-secondary education and associated costs. Unlike scholarships and grants, student loans must be repaid with interest. In New Zealand, student loans are administered by StudyLink, a service of the Ministry of Social Development.
Eligibility Criteria
To qualify for a student loan, you must meet specific eligibility criteria:
- Citizenship and Residency: You must be a New Zealand citizen, an ordinarily resident in New Zealand, or hold a residence class visa and have lived in New Zealand for at least three years.
- Enrolment: You must be enrolled in an approved course at an approved education provider.
- Academic Progress: You need to have passed at least half of your courses in the last five years if you have previously received a student loan.
Components of a Student Loan
A student loan can cover several aspects of your education costs:
1. Tuition Fees
The loan can pay for your tuition fees directly to your education provider. This ensures that your fees are covered without you having to manage the payments yourself.
2. Course-Related Costs
You can borrow up to $1,000 per year for course-related costs such as textbooks, computer equipment, and other study materials. This amount is paid directly to you, allowing you to manage these expenses as needed.
3. Living Costs
If you are a full-time student, you can borrow money to help cover your living costs. The maximum amount you can borrow for living costs is $228.81 per week. This is intended to help with rent, food, and other day-to-day expenses.
Application Process
Applying for a student loan involves several steps:
- Check Your Eligibility: Before applying, ensure you meet all eligibility criteria. You can use the eligibility test available on the StudyLink website.
- Create a RealMe Login: If you don’t already have one, create a RealMe login to access StudyLink services online.
- Complete the Online Application: Fill out the application form on the StudyLink website. You will need to provide details about your course, living situation, and financial circumstances.
- Submit Supporting Documents: You may need to provide documents to verify your identity, enrolment, and other information. These can be uploaded online using the Connect service.
- Sign the Loan Contract: Once your application is processed, you will receive a loan contract that you must sign and return to StudyLink.
Repayment
Repaying your student loan begins once you start earning above a certain income threshold. The current repayment threshold is $24,128 per year. Repayments are calculated at 12% of your income above this threshold and are automatically deducted from your salary by your employer.
Interest and Fees
While you are living in New Zealand, your student loan is interest-free. However, if you move overseas for more than six months, interest will be charged on your loan. There is also an annual administration fee of $40.
Managing Your Loan
It’s important to keep track of your student loan balance and repayments. You can do this through the Inland Revenue website, where you can view your loan balance, repayment history, and make additional payments if you wish to pay off your loan faster.
Living Overseas
If you move overseas, your repayment obligations will change. You will need to make repayments based on a fixed repayment schedule, and interest will be charged on your loan. It’s crucial to inform Inland Revenue of your move to ensure you meet your repayment obligations and avoid penalties.
Additional Support
In addition to student loans, you may be eligible for other forms of financial support:
- Student Allowance: This is a weekly payment to help with living costs that you do not have to repay. Eligibility is based on your income and your parents’ income if you are under 24 and single without children.
- Scholarships and Grants: Various scholarships and grants are available to help cover tuition fees and other expenses. These do not need to be repaid and can significantly reduce your reliance on loans.
Understanding the ins and outs of student loans is crucial for managing your finances while pursuing higher education. By familiarising yourself with the eligibility criteria, application process, and repayment obligations, you can make informed decisions and ensure that your education investment is manageable. Remember to explore all available financial support options to minimise your debt and make the most of your educational journey.
References:
- StudyLink. “Student Loan.”
- StudyLink. “Eligibility for Student Loans and Allowances.”
- StudyLink. “Apply Online for First-Time Students.”
- Inland Revenue. “Student Loans.”
- University of Auckland. “How to Apply for a Student Loan or Allowance.”
- Citizens Advice Bureau. “How Do I Get a Student Loan?”
- Parents.education.govt.nz. “Student Loans and Allowances.”