3 ways to ease the stress of student loans once & for all

Posted March 2018

student loans

Study up on these tips for reducing student loan debts

Life as a student is a time of study, learning, and making memories.

You know, the kinds of experiences - and friendships - that last a lifetime.

But like a bad hangover on a school night, the trailing $000's of your student loan may haunt you the longest. When you combine this with unexpected financial emergencies and everyday expenses? It can all be too much! 

With free tertiary education still a little ways off, it can also be easy to stress over the horror stories.

Today we're sharing our tips for reducing your student loans and ensuring yours is one of them. With them, you'll ensure you're accruing knowledge - and not lifelong debt - as you study. This includes:

  • How doing nothing might be the smartest move of all.  
  • Why interest-free finance isn't an open invitation to borrow.
  • How you can lower the amount you pay tomorrow, today, with some smart savings ideas.

To start, let’s look at how the stress of student debt may not be all it's cracked up to be...

1. It might sound crazy, but don’t pay a cent extra!

Okay, we know this one sounds a little far-fetched, but let us explain!

Kiwi students are luckier than their international counterparts in one key way:

Unlike most other countries, New Zealanders borrowing money for study aren't charged interest.

While you'll still need to make repayments, this does affect how you manage this debt. How so? Consider that one of the most popular debt repayment strategies is the 'Debt Avalanche'. This plan sees you repaying high-interest debts first, as you'll save more money in the long run.

So, as your student loan doesn't accrue interest, where do you think it fits?

Hands up if you know the answer!

If you suggested 'Somewhere at the bottom!', you'd be right.

You see, the stress of debt can often be more difficult to manage than the debt itself.

Rather than give in to these fears, instead focus on paying off high-interest credit cards, individual loans, and other debts first, and think about the money you borrowed to study last.

By doing so you'll save money which you can put towards a savings account, a smart investment, or paying back the money you've borrowed faster. That said, we understand not everyone is comfortable carrying a debt like this around with them.

If you'd prefer to shake the psychological burden of your student loans, then maybe...

2. Borrow exactly what you need, and not a dollar more!

Not everyone is happy to let sleeping debts lie.

And for good reason.

Outstanding debts could make it difficult to land low-interest finance or buy a house in the future. 

Oh, and did we mention you'll start paying interest if you move or travel overseas?

If you'd prefer to pay off your student debts sooner rather than later, it all starts...well...at the start.

Student loan meme

That's right!

We know it sounds simple, but the most effective way to reduce what you pay is to not borrow as much in the first place. Remember, a student loan is money you'll have to pay back.

It isn't a blank cheque.

The more you borrow? The higher your repayments will be.

So when it comes to easing the stress, the process starts early. Make sure you borrow only what you need, and not a cent more. It may be tough at the time, but you’ll thank yourself for it in the future.

3. Cut costs and make smart savings sooner rather than later!

student loan savings

Sometimes the simplest strategies are also the most effective.

In this case? You won’t need to borrow as much if you don’t have as much to pay for.

A loan for studying helps you cover your expenses, yes, but it isn't an excuse to throw common sense and your savvy, money-saving ways aside. Far from it, in fact.

The more you save now, the less you'll have to pay later.

To make life that little bit easier, consider these student savings ideas:

  • Be money savvy and shop secondhand
    Buy used textbooks and other materials via Trade Me, Facebook Groups, or other students. Buy secondhand textbooks etc online via TradeMe or Facebook Groups
  • Make the most of your student discounts
    Certain stores, restaurants, and even movie cinemas offer discounted textbooks, software, tech, and movie tickets if you're studying.
  • Socialise but save some cents
    Hanging out with friends is a big part of student life, but it doesn't have to be expensive. Try and cut back on expensive meals and the like when you're out! 

Frequently Asked Questions (FAQ)

student loan faq

Is student financing secured or unsecured?

All student loans are considered 'unsecured finance'. That is, you don't require an asset like a car or other motor vehicle to act as security.

Do lenders "means-test" this kind of finance? 

No. What you or your parents earn - or, for that matter, own - does not affect your ability to apply for and receive a student loan.

How much money can I borrow?

The money you can borrow as a student is comprised of three distinct parts:

  • Cost Of Living: You can borrow a set amount each week to cover living expenses. This amount varies depending on whether you're also receiving a student allowance.
  • Course Costs: You can borrow a lump-sum amount in order to afford items that relate to your course like textbooks, travel, and electronic equipment (e.g. Laptops).
  • Compulsory Fees & Charges: You can borrow enough to cover your tuition fees, which are paid directly to your place of study via StudyLink.

Note: If you're over 55, you'll only be eligible for the Compulsory Fees & Charges.

Can I apply for finance if I defaulted on my last one?

No. If you're carrying a default of $500 or more and part of that amount has been due for over a year, you will not be able to borrow any more money.

What's the difference between a Student Loan and a Student Allowance?

A student loan is an amount you borrow from the government to cover fees, tuition, and other expenses. Once you've finished studying and begin earning over a certain amount, you will be required to pay this money back.

A student allowance, on the other hand, is financial support offered by the government to help make life easier for struggling students. This money does not need to be repaid.

What does a student loan cost?

An establishment fee of $20 is required every time you apply. Administration fees are also charged annually if you have an outstanding balance of $20 or more.

What happens if I go overseas?

If you live overseas for more than six months, your student loans will begin to accrue interest. Learn more about travel and student lending via the IRD website.

Additional resources for Kiwi students

Don’t let student loans stress you out

Money borrowed for studying can be an ongoing source of stress for many Kiwis.

Like most debts, it can hang over your head like a dark cloud following you everywhere you go. What you need to remember is that repaying your lenders is a matter of 'when', not 'if'. 

As student lending doesn't accrue interest, there's no need to stress as much as most students do.

By taking your time, being money smart, and employing some simple savings strategies - such as those we've mentioned above - you can take the stress out of student loans once and for all.

Yes, they're a debt.

But they're a smart debt.

You're not buying a new TV or splurging on a holiday, you're investing in yourself and your future. So soak it up, enjoy the experience, and keep your smarts about you and you'll be saying goodbye to pesky student debts sooner than you think.


Want to know your options?

Try our personal loan calculator.


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The article published on this page is not financial advice and should not be relied upon as such. The opinions published in this article is not those of Unity Credit Union.