Student Loan Interest Rate
If you live in New Zealand, your student loan is interest free. Nothing is charged, and nothing accrues. If you are overseas-based, interest is charged at 5.6% a year, calculated daily and added to your loan after 31 March.
The rates in force for 2026–27
Three separate rates, and most borrowers never meet any of them. Inland Revenue sets all three at the start of the tax year, on 1 April.
| What it applies to | Annual rate | Charged as |
|---|---|---|
| Living in New Zealand | 0% | Nothing is charged |
| Living overseas | 5.6% | 0.01534% a day |
| Overdue amounts | 9.6% | 0.766% a month |
| Overdue, on an instalment plan | 7.6% | 0.612% a month |
Inland Revenue labels this year 2027 in its own published table, meaning the year ending 31 March 2027. This site calls the same year 2026–27. The rates are identical, only the labelling differs.
Why no interest line appears on your payslip
This is the question behind most searches for a student loan interest rate, and the answer is short. Interest is not a payroll deduction. It is not PAYE, it is not withheld, and your employer has nothing to do with it.
What your employer deducts is the repayment: 12% of every dollar you earn above $24,128 a year. That money reduces your balance. Interest, if you are overseas-based, is added to the balance separately by Inland Revenue once a year. The two never appear together, and only one of them touches a pay run.
So a payslip showing a student loan line and no interest line is correct. If you live in New Zealand there is no interest to show, and if you live overseas there is no New Zealand payslip.
How the overseas-based interest is calculated
- Daily, on the balance you owe. The daily rate is 0.01534%. On a balance of $25,000 that is about $3.83 a day, or roughly $1,400.00 across a full year.
- Added once, after 31 March. It accrues daily but is not applied to the loan until the year ends. You can watch it building in myIR without it being part of your balance yet.
- Reset every 1 April. The rate is set at the start of each tax year and holds for the whole year. Last year it was 4.9%.
- Not charged in every overseas situation. There are circumstances where an overseas-based borrower is not charged interest, including some study and work situations. Inland Revenue decides these case by case.
Late payment interest is a separate charge
If a repayment is not made on time, Inland Revenue can charge late payment interest of 9.6% a year on top. Two limits are worth knowing. It is charged only on the overdue amount, not the whole loan, and only once that overdue amount reaches $334. Below that figure nothing is charged.
It keeps being charged until you catch up. Arranging an instalment plan and keeping to it can move you to the reduced rate of 7.6%, which is 2% less on the overdue balance.
The $40 administration fee
Separate from interest, and it reaches almost everyone with a loan. If your balance is $20 or more at 31 March, Inland Revenue charges $40 to cover the cost of managing the loan. It is not charged in the same year you are charged an establishment fee, and it does not depend on where you live. An interest-free loan is not a cost-free loan.
Every rate since 2017
Inland Revenue publishes the full history, and the three rates move together: late payment has run four points above the standard rate throughout, and the reduced rate two points above that. Years are labelled as Inland Revenue labels them, by the year the tax year ends.
| Tax year | Standard | Late payment | Reduced late payment |
|---|---|---|---|
| 2027 (2026–27) | 5.6% | 9.6% | 7.6% |
| 2026 | 4.9% | 8.9% | 6.9% |
| 2025 | 3.3% | 7.3% | 5.3% |
| 2024 | 2.9% | 6.9% | 4.9% |
| 2023 | 2.8% | 6.8% | 4.8% |
| 2022 | 3% | 7% | 5% |
| 2021 | 3.5% | 7.5% | 5.5% |
| 2020 | 4% | 8% | 6% |
| 2019 | 4.3% | 8.3% | 6.3% |
| 2018 | 4.4% | 8.4% | 6.4% |
| 2017 | 4.8% | 8.8% | 6.8% |
Every figure applies to overseas-based borrowers. The New Zealand-based rate has been 0% for every year in this table.
Next
- Student loan repaymentsHow the 12% repayment is worked out
- Student loan calculatorYour repayment on your own pay
- Student loan repayment thresholdThe figure the repayment starts above
- Tax refundWhat the end of the tax year settles
- take-home pay calculatorYour pay with the student loan line included
Common questions
What is the student loan interest rate in NZ?
If you are New Zealand-based it is zero. Student loans are interest free for borrowers living in New Zealand. Overseas-based borrowers pay 5.6% a year, which is a daily rate of 0.01534%. Inland Revenue resets the rate on 1 April each year.
Why is there no interest line on my payslip?
Because interest is not a payroll deduction. Your employer deducts the 12% repayment and sends it to Inland Revenue. Interest, where any is charged, is applied to the loan balance by Inland Revenue after 31 March. Payroll is not involved and has no figure to show.
When does my student loan start charging interest?
When you become overseas-based. Inland Revenue calculates it daily on your balance from that point and adds it to the loan after 31 March each year. It shows in myIR as it accrues, before it is added. Becoming New Zealand-based again stops it.
What is the late payment interest rate on a student loan?
9.6% a year, charged as a monthly rate of 0.766%. It applies only to the overdue amount, and only once that amount reaches $334. The standard rate carries on applying to the rest of the balance.
Can the late payment interest rate be reduced?
Yes. Arrange an instalment plan with Inland Revenue and keep to it, and the rate can drop to 7.6%, charged monthly at 0.612%. Keeping to the plan is the condition.
Is there an annual fee on a student loan?
Yes. A $40 administration fee applies if your balance is $20 or more at 31 March. It is not charged in a year you are charged an establishment fee, and it applies whether you are New Zealand-based or overseas-based.
Where these figures come from
2026–27 tax year (1 April 2026 – 31 March 2027). Last verified 30 July 2026.
Related
- Student loan repaymentsThe 12% that does come out of your pay
- Student loan repayment threshold$24,128 a year, and per pay period
- Student loan calculatorWhat your repayment is on your own pay
- The SL suffixThe tax code that starts the repayment
- how to read a New Zealand payslipEvery line, and why interest is not one of them