Student loan repayments when you're self-employed

As an employee, your student loan repaid itself. Your employer deducted 12% of your pay over the pay-period threshold before you saw it. Going self-employed switches off that automatic deduction, not the obligation itself. The loan becomes one more thing that squares up through your tax return, and once it's large enough it gets its own pay-as-you-go schedule. This guide covers how that works and the set-aside adjustment it means for you.

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.

Put a typical contractor income through it. $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. That's a fourth cost to plan for, and it's not small.

Interim repayments through the year

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). It works like provisional tax. There's no interim requirement in year one, your obligation is measured at the first return, and then it converts to pay-as-you-go. So the year-two stacking effect hits the loan too, and 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 into two parts. Your employer keeps deducting on the salary as before, and the self-employed profit is assessed separately through the return. The deductions from your 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 more things

• The loan is interest-free while you live in New Zealand. This matters if you are thinking about repaying faster. Voluntary extra repayments reduce the balance but save you no interest while you are NZ-based. Whether to pay ahead is a personal-finance decision, not a tax one.
• Moving overseas changes the rules entirely. Interest starts, and the obligations change shape. If time abroad is in your plans, read Inland Revenue's overseas-borrower guidance before you go, not after.

How Coffer helps

Coffer already works out what portion of each payment isn't really yours, and a student loan is one more claim on that money. Your repayment is assessed on your profit, and that's the figure Coffer tracks all year from your invoices and expenses. So you can size the 12%-over-threshold slice alongside your tax set-aside using numbers you already have.