retirement.org.nz

Sorted.org.nz has revamped its Student loan calculator to reflect changes in the student loan repayment system, which is run by Inland Revenue.

David Kneebone from sorted.org.nz says all students should experiment with the Student loan calculator to test the long-term implications of extending a student loan.

David Kneebone said the Student loan calculator could also help you work out the financial implications of going overseas straight after graduation.

“It’s worth playing around with the calculator and seeing what will happen to your student loan debt with a few different scenarios.

“If you leave New Zealand for six months or more, you’ll have to pay around 6.6% interest unless you’re studying or working for the government. You can take a repayment holiday for up to three years, but that doesn’t stop the interest accruing.

“So if you decide to go overseas with a $15,000 student loan and take the three year repayment holiday, it will cost you $3,123 in interest and take three more years to repay²,” he said.

Using the calculator, you can also work out how you can use the Government’s new 10% voluntary repayment bonus to shorten the term of your student loan.

“It’s clearly worthwhile getting the voluntary repayment bonus. You only need to increase your minimum payments by $10 per week and the Government gives you an extra 10%. So if you repay $500 above the minimum amount, you get $550 off your loan. It’s like interest, only in reverse,” he said.

To check out the student tools at sorted.org.nz, visit:

• Information and tips on the best ways to pay for your study are at www.sorted.org.nz/life-stages/students
   
• Use Sorted’s Student loan calculator at www.sorted.org.nz/calculators/student-loan/

¹Based on earning a salary of $35,000 on graduation and $42,500 five years later. 

²Based on going overseas for three years and taking a three year repayment holiday, then returning and earning a salary of $35,000, rising to $42,500 five years later.