If you are moving overseas, it may feel like paying off your student loan is not at the top of your priority list. However, a failure to service your student loan whilst overseas can lead to complications when you get back, and may also lead to a debt collector chasing your debts internationally.

If you have a student loan and you move overseas, your loan will no longer be interest free. Interest will begin to be charged at a rate of 2.8% per annum from the day after you leave New Zealand. If payments are missed or skipped, these payments can incur a penalty interest rate of 6.8%.

Once you move, payments towards your loan cease to be automatically taken from your salary and must be paid manually. The two due dates for loan repayments are 30 September and 31 March.

If you fail to make loan payments to the IRD whilst living overseas, a debt collection agency may be employed in the country that you live to locate you and compel you to pay the debt.

It is possible to get a temporary repayment suspension whilst you are overseas. To get this, you must inform the IRD either prior to, or within 6 months of, leaving New Zealand. During a temporary repayment suspension, you will still be charged interest on your loan, you just won’t have to make repayments on it whilst you are abroad.

As well as this, a failure to make your required payments whilst overseas can lead to complications when you return to New Zealand. It is likely that when you return to New Zealand the IRD will contact you regarding your debt. You will likely be made to pay your debt to the IRD, which will have increased significantly because of the penalty interest rates for missed payments.

When moving overseas, student loan payments are often the last thing on people’s minds. A failure to properly address these payments can however lead to costly consequences down the line.

If there is confusion regarding a debt collection against you, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.