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Student loans
Nga putea taurewa akonga
Interest charges and other write-offs

Interest write-off and reduction entitlements when living overseas

image of overseas and writeoffs for student loans

Interest reduction

In full-time study overseas

What you need to do

At the end of the income year (31 March) in which you met the qualifying criteria send evidence of your full-time study with a written application requesting the interest write-off to the Non-residents Centre.

Evidence of your study should be in the form of a letter from the university or educational institution you studied at.  The letter should confirm your attendance and the start and end dates of your study.  Please do not send in a copy of your enrolment document as it only shows your intention to study - not that you actually did study.

For each year that you qualify you will need to apply as set out above.

When the write-off happens

You will see the credited interest amount appear on the statement we send you shortly after we have calculated your interest write-off.

What is written off

We will calculate whether you are entitled for an interest write-off of all or part of your base interest.

An example of how the interest reduction works - for borrowers of student loans who are overseas.

Jenn is studying full time at Harvard University. She has made a written application to negotiate a nil non-resident repayment obligation for the 2007 year as she is not earning while studying. At the end of the year (31 March 2007) Jenn writes to request a base interest write-off.

Jenn's loan balance was $17,000 at the beginning of the tax year for which the base interest write-off applies.

Below is the effect of her base interest write-off.

Negotiated non-resident repayment obligation to 31 March 2007 $0
Write-off calculation:
Base interest charged for the year $646
Less the non-resident repayment obligation $0
Base interest written-off: $646
Interest calculation:
Total interest charged (17,000 x 6.9%) $1,173
Less the base interest write-off $646
Interest to be added to the loan principal $527
Loan balance calculation:
Loan balance at the beginning of the year $17,000
Plus the interest calculated $527
Total loan balance as at 1 April 2007 $17,527

For more information see our student loan booklet Interest free student loans and other interest write-offs (IR222).



Date published: 30 Mar 2005

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