Inland Revenue collects repayments of Student Loans from borrowers. If the borrower lives in New Zealand and has income from salary or wages, the employer deducts the Student Loan repayment along with tax and passes it to Inland Revenue. About four-fifths of Student Loan borrowers repay their loans like this.
Borrowers who earn income from other sources may need to make repayments at the end of the tax year, or in three equal lump sum payments during the year.
The Government wants to make it easier for all borrowers to stay on top of their Student Loans by making regular payments throughout the year.
This change would remove worry for some borrowers about having to make a large payment at the end of the year.
The proposals in the discussion document apply to borrowers who live in New Zealand. There is no change for borrowers who live overseas, unless they are earning income in New Zealand.