Starting tertiary study in NZ means navigating StudyLink, a system that confuses even the most organised students. This guide breaks down the two main types of student support (allowance and loan), explains the parental income test, walks through the application process, covers the living costs loan, course-related costs, and explains exactly how repayment works after graduation, including the interest-free conditions and overseas repayment obligations.
| Feature | Student Allowance | Student Loan |
|---|---|---|
| What is it? | Weekly grant (non-repayable) | Loan (must be repaid) |
| Income tested? | Yes (your income AND parents' income if under 24) | No income test for fees/course costs; living costs capped |
| Maximum weekly rate | ~$305/week (single, away from home, 2026) | Living costs: ~$305/week; fees: full amount; course costs: up to $1,000/year |
| Repayable? | No | Yes, at 12% of income over threshold |
| Interest | N/A | 0% while living in NZ; interest charged if overseas |
If you're under 24, StudyLink assesses your parents' combined income to determine your Student Allowance eligibility. This catches many students off guard. The thresholds (approximate, as at 2026):
Exemptions from the parental income test:
Apply at studylink.govt.nz or through the MyStudyLink app. You'll need:
Apply at least 3 weeks before semester starts. Late applications are common and cause payment delays. First payments often arrive 2 to 3 weeks after approval.
Your student loan can cover the full cost of tuition fees. This is paid directly to your institution, not to you. There's no cap on the amount (it's whatever your course costs), but Fees Free covers the first year for most domestic students, so many students don't borrow for fees in year one.
Fees Free (first year): If you haven't previously studied, your first year of tertiary is likely covered by the government's Fees Free policy (up to one EFTS, equivalent to one year full-time). This is NOT a loan; it's a grant. After year one, you'll need to borrow for fees or pay out of pocket.
A weekly payment to help cover rent, food, and daily expenses. As at 2026, approximately $305/week for a full-time student. This IS a loan, you WILL repay it.
Critical: the living costs loan is the part that catches graduates. Three years of borrowing $305/week for 40 weeks/year = approximately $36,600. Add that to tuition fees of (say) $7,000/year x 3 = $21,000, and your total loan at graduation is roughly $57,600. Many students don't realise how much they're borrowing because it arrives weekly in small amounts.
Up to $1,000 per year for textbooks, equipment, stationery, and other study costs. Paid to you as a lump sum each semester. Also a loan (repayable). Most students use this for textbooks and a laptop in year one, then don't claim it in later years.
If you qualify for Student Allowance (based on parental income test), you receive up to ~$305/week that you DON'T have to repay. This replaces the living costs component of the loan. You can still borrow for fees and course costs on top.
If your allowance is less than the living costs maximum (because your parents' income partially reduces it), you can "top up" with a living costs loan for the difference.
On top of either allowance or living costs, you may qualify for Accommodation Benefit (separate from Accommodation Supplement). This is a non-repayable top-up of up to $60/week for students with high accommodation costs relative to income. Check with StudyLink.
Student Allowance abates (reduces) if you earn over a certain amount from part-time work (approximately $253/week before tax, as at 2026). Earn more than this and your allowance drops dollar-for-dollar. Student Loan living costs are NOT income-tested, so working doesn't affect your loan.
Tax codes for students: use M on your part-time job if it's your main income, add "SL" if you have a student loan (e.g. "M SL"). This triggers automatic 12% repayments once you're over the repayment threshold.
Once you're earning above the repayment threshold (approximately $24,128/year from salary/wages, as at 2026), you repay 12 cents of every dollar OVER that threshold. This is automatically deducted from your pay if you're using the correct tax code (M SL, S SL, etc.).
Your student loan is interest-free as long as you're a NZ-based borrower (living in NZ). The moment you go overseas for more than 184 consecutive days, interest starts accruing. As at 2026, the overseas interest rate is approximately 3.1% per annum.
This is one of the most generous student loan regimes in the world. The effective cost of borrowing is zero if you stay in NZ. However, many graduates head overseas for their OE (overseas experience) and are shocked when interest accumulates.
If you leave NZ for more than 184 days:
You can make extra repayments anytime. The faster you pay, the sooner you're debt-free. There used to be a 10% bonus on voluntary repayments, but this was abolished in 2012. Still, paying off faster means you carry less risk if you go overseas.
Because NZ student loans are interest-free while you live in NZ, there's a genuine debate about whether extra repayments are smart. Arguments both ways:
The correct answer depends on your plans. If you might go overseas, pay it off first. If you're staying in NZ long-term, the interest-free loan is essentially free money and your extra cash is better deployed elsewhere.
Two students at the same university, same course, same 3 years:
The parental income test is the single biggest determinant of post-graduation financial position. It's worth understanding and claiming every dollar of allowance you're entitled to.
Graduated with $52,000 student loan. Went to London for a 2-year OE. Didn't make overseas repayments.
Lesson: If you go overseas, set up overseas repayments before you leave. IRD sends the schedule. Missing payments triggers compound penalties that grow fast.
Receives Student Allowance of $305/week. Works part-time at a cafe earning $280/week (under the ~$253 threshold after tax adjustments).
Lesson: Student Allowance reduces dollar-for-dollar above the income threshold. If you're going to work extra hours, calculate whether the extra income minus the lost allowance is actually worth it. Sometimes working more costs you money.
Started a 4-year engineering degree. Assumed Fees Free covered all 4 years.
Lesson: Fees Free covers approximately 1 year (one EFTS). After that, you need to borrow or pay. Apply for a student loan for fees in year 2 BEFORE semester starts, not after the invoice arrives.
Graduated with $45,000 loan. Earns $72,000. Considered making voluntary extra repayments.
Lesson: For NZ-based borrowers, the 0% interest means your money works harder elsewhere. The mathematically optimal move is to let the compulsory 12% handle the loan and invest extra cash. Exception: if you're planning to go overseas, pay it off first.
Quiz on Student Allowance and Student Loans
If you've found a bug, or would like to contact us, or learn more about James Graham and Calculate.co.nz.
Calculate.co.nz is partnered with Interest.co.nz for New Zealand's highest quality calculators and financial analysis.
All calculators and tools are provided for educational and indicative purposes only and do not constitute financial advice.
Calculate.co.nz is proudly part of the Realtor.co.nz group, New Zealand's leading property transaction literacy platform, helping Kiwis understand the home buying and selling process from start to finish. Whether you're a first home buyer navigating your first property purchase, an investor evaluating your next acquisition, or a homeowner planning to sell, Realtor.co.nz provides clear, independent, and trustworthy guidance on every step of the New Zealand property transaction journey.
Calculate.co.nz is also partnered with Health Based Building and Premium Homes to promote informed choices that lead to better long-term outcomes for Kiwi households.
All content on this website, including calculators, tools, source code, and design, is protected under the Copyright Act 1994 (New Zealand). No part of this site may be reproduced, copied, distributed, stored, or used in any form without prior written permission from the owner.
© 2019 to 2026 Calculate.co.nz. All rights reserved.