Student loan repayments when you're self-employed

As an employee, your student loan repaid itself: 12% over the pay-period threshold, deducted before you saw it. Going self-employed switches that automation off but not the obligation, and the loan becomes one more thing that squares up through your tax return, with its own pay-as-you-go schedule once it's big enough. This guide covers the mechanics and the set-aside adjustment they imply.

How repayment works without an employer

The obligation is 12% of everything you earn over the annual repayment threshold ($24,128 for the year ended 31 March 2026; the current figure shows in myIR). For self-employed income, the calculation runs on your adjusted net income: your non-salary income minus expenses, i.e. the same profit figure your IR3 produces. File the return, and the year's repayment obligation is assessed alongside the tax.

The arithmetic at contractor incomes is worth seeing plainly: $90,000 of profit is roughly $65,900 over the threshold, so about $7,900 of loan repayment for the year, on top of income tax, GST, and ACC. It's a real fourth line, not a rounding error.

Interim repayments: the loan's own provisional tax

Once an end-of-year repayment obligation reaches $1,000, the next year brings interim repayments: instalments spread through the year, on the same style of calendar as provisional tax (your own dates show in myIR). The pattern will feel familiar by now: the system leaves you alone in year one, measures you at the first return, then converts the obligation to pay-as-you-go, which means the year-two stacking effect applies to the loan as well: year one's repayment and year two's interim instalments can land in the same twelve months.

If you also earn a salary

Contracting alongside a job splits the repayment machinery: your employer keeps deducting on the salary as before, and the self-employed profit is assessed separately through the return. The deductions from pay don't cover the side income, so the set-aside note above applies to the side profit even when payroll seems to be handling things.

Two things worth knowing, briefly

• The loan is interest-free while you live in New Zealand, which shapes the repay-faster question: voluntary extra repayments reduce the balance but earn no interest saving while you're NZ-based. Whether to pay ahead is a personal-finance call, not a tax one.
• Moving overseas changes the rules entirely (interest starts, obligations change shape); if a stint abroad is in your plans, read Inland Revenue's overseas-borrower guidance before you go, not after.

How Coffer helps

Coffer's dashboard is built on knowing what portion of each payment isn't really yours, and a student loan is one more claim on that money. The profit figure the repayment is assessed on is the one Coffer tracks continuously from your invoices and expenses, so sizing a 12%-over-threshold slice alongside your tax set-aside uses numbers you already have, all year.