2007 amendment to the Student Loan hardship provisions allows hardship relief for any amount which has already been paid.

Sections 54, 55, and 55A to 55D of the Student Loan Scheme Act 1992

The hardship provisions have been amended to allow hardship relief for any amount which has already been paid.

Background

Borrowers may be granted relief from payment of their annual repayment obligation in cases of serious hardship. (The payment is not written off, but is payable from future obligations.) However, under the old rules, the repayment obligation could not be reduced below any payments already made during the year, and the obligation to make payments due during the year could not be suspended.

Key features

The hardship provisions have been amended to ensure that payments of obligations that fall due during a tax year do not preclude a borrower from being granted relief from payment of an annual repayment obligation. Any amount which has already been paid that exceeds the amount of the repayment obligation determined at the end of the tax year may be refunded.

Hardship applications may be made for the current tax year and the preceding and following years.

Inland Revenue will be able to reduce any payments which fall due during the tax year, including to zero, if it is considered that the borrower is likely to qualify for hardship relief. The standard deduction rate for salary and wage earners of 10 cents in the dollar over the repayment threshold may be reduced by the issue of a special deduction rate which the borrower is required to give to his or her employer. The amount required during the tax year from borrowers required to make interim repayments or by overseas-based borrowers may also be reduced.

Borrowers must inform Inland Revenue of any changes in their circumstances which affect their application for hardship relief. Inland Revenue will be able to review any hardship relief given after the end of the tax year when all the facts for that year are established and may modify the relief previously granted if the circumstances on which the original decision to grant hardship relief have changed.

Application date

The changes apply to hardship applications made from 28 March 2007.