Andy: student loan and first full-time job

Picture of Andy

Andy has recently completed his marketing degree at university and has just got his first full-time job, as a communications advisor with a starting salary of $35,000 a year. Andy owes $15,000 on his student loan, which paid for course fees and some living costs. Andy lives in New Zealand and qualifies for an interest-free loan. Now that he's earning an income, Andy is required to start repaying his loan.

Choosing a tax code

In the first week of work, Andy's employer asks for his bank account number, IRD number and tax code. He uses the decision tree (external link) to work this out. His tax code is suggested as "ME SL". This is because he qualifies for the independent earner tax credit and has a student loan.

Paying back his student loan

Based on the tax code suggested, Andy's employer deducts student loan repayments from his pay and sends them directly to Inland Revenue. Andy's keen to see how long it’s going to take him to repay this loan, so he uses the student loan repayment calculator (external link) to work it out. After Andy finds out how long it’s going to take him to repay the loan, he decides to make voluntary repayments to pay off the loan faster.

Find out more about making compulsory and voluntary repayments by visiting student loans (external link)

Joining KiwiSaver

Since Andy has just started a new job and meets the criteria, he'll be automatically enrolled in KiwiSaver by his employer. Andy will receive a KiwiSaver employee information pack (KS3) from his employer. Andy will need to complete the KiwiSaver deduction form (KS2) from the KS3 pack, and give it back to his employer. Andy will have 8 weeks to decide whether he wants to remain a member of KiwiSaver or opt out. (external link)

Contributions will start being deducted from his first payday and continue unless he decides to opt out. If Andy decides to opt out of KiwiSaver he'll need to complete a New employee opt out request (KS10) and any deductions made from his wages will be refunded to him.