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“Student loans, like any loan, can have a significant impact upon your ability to save, and therefore your lifestyle. The sooner you take action to reduce the impact your student loan will have on your future, the better off you’ll be,” said Ms Crossan.

“Although you probably won’t start paying off your loan until you’re working, there are some things students can do while they’re studying to reduce the impact of their loan on their future.”

In the next two weeks over 400,000 student loan holders will receive their student loan statement from the Inland Revenue Department identifying the size of their student loan. If you’re one of these people, Ms Crossan says, this week when you receive your student loan statement is the time to make a plan to manage your loan.

The Retirement Commission recommends the following steps to reduce the impact your loan will have on your future:

Know the true cost of your loan
Keep tabs on the true cost of their loan – as it adds up quickly! Knowing how much you owe means you can make informed decisions about whether you want to increase your loan for the following year, and by how much.

Only borrow what you need
While you’re a student you’re unlikely to be able to repay your loan. So, if you can, keep your borrowing to a minimum – the less you borrow, the less you will have to repay. The challenge is to work out if you can reduce the amount you borrow. Here are some options to think about:

A. Can you reduce your expenses?
By reducing your living expenses, you can reduce how much you borrow by the same amount. Making a budget helps you work out where your money is going, and therefore whether you can shave costs off your living expenses. Use the Student Budget Calculator at www.sorted.org.nz to make budgeting easier.

B. Look for additional income
Additional income will take the pressure off how much you need to borrow while you’re studying. If you can’t afford the time to get a job or increase the hours you’re already working, check out the scholarships and student assistance schemes offered where you study by contacting your Student Services Office or through the Funding Information Service (www.fis.org.nz).

Depending on your financial circumstances, you may be eligible for the Student Allowance, the Independent Circumstances Allowance and the Accommodation Benefit. And you may also be eligible for an Unemployment Benefit (Student Hardship) during your study break. And most students are eligible for a Community Services Card. For more information about your entitlements for financial support while you’re studying, visit Study Link (www.studylink.govt.nz).

What about credit card or other debts?
If you have other debt, pay off your higher interest debt first – as it’s the one that will cost you the most money in interest. Use Sorted’s Get Out of Debt calculator to work out the cheapest repayment option given all of your loans.

The same goes for when you start working and start making repayments on your student loan – identify which loan is costing you most in interest, and pay that one back as quickly as possible.

For more information and calculators to help you work out the true cost of your loan and how quickly you can pay it off, visit the Students section at www.sorted.org.nz.

Ends

For further information contact:
Robyn Cormack
Marketing Communications Manager
Retirement Commission
Tel: 04-494 6243
Mobile: 025 242 7936
Email: robyn.cormack@retirement.org.nz