Payment allocation

Sections 2, 117 (repealed), 194, 221 (repealed), schedule 7 (repealed) and sections 2 and 57 (repealed) of the Student Loan Scheme Amendment Act 2012

Changes to the order in which payments and deductions are allocated to obligations, unpaid amounts, and the loan balance have been repealed.

The changes were to come into force on 1 April 2013. Repealing these changes thereby retains the existing payment allocation rules of offsetting payments and deductions first against any interest charged, and secondly, any remainder against any principal outstanding.

Section 117 has also been repealed to ensure that all compulsory student loan deductions satisfy a borrower's salary and wage repayment obligation on a pay-period basis regardless of whether the borrower is New Zealand-based or overseas-based. Previously, compulsory deductions made from New Zealand salary and wages during the period a borrower was overseas-based could be used to satisfy the borrower's overseas-based borrower repayment obligation.

An amendment to section 194 also ensures that compulsory deductions must not be used to satisfy other repayment obligations, unpaid amounts, or penalties.

Application date

The amendments apply from 1 April 2013.