University starts in a few weeks, and the costs are adding up fast. Your son or daughter needs help with the rental bond, a reliable laptop, and enough to cover the first few weeks while they settle in. You're happy to help, but you want to do it properly.

Here's what most Kiwi parents don't realise: how you structure this help today can have significant consequences years down the track.

The Real Cost of University for Parents

Beyond tuition fees and student allowances, there are upfront costs that catch families off guard:

• Rental bonds and advance rent: $2,000-4,000 depending on the city

• Laptop or computer: $1,500-3,500 for something that'll last the degree

• Car for commuting: $8,000-15,000 for something reliable

• Textbooks and supplies: $500-1,000 per year

• Living expenses while settling in: $2,000-3,000

Many parents end up shelling out or lending $10,000-20,000 to get their kids properly set up for university. That's a significant amount and it deserves to be treated as such.

Why "We'll Sort It Out Later" Doesn't Work

The conversation often goes like this:

Parent: "We'll lend you the money for uni. Just pay us back when you can."
Student: "Thanks, I really appreciate it."

No paperwork. No clear terms. Just family helping family.

Fast forward three years. Your child graduates and lands their first proper job. They're ready to buy their first home or car. The bank asks: "Have you received any financial help from family?"

This is where things get complicated.

Without documentation, the bank has to make assumptions:

• Was it a gift or a loan?

• If it's a loan, what are the repayment terms?

• Does this affect their ability to service a mortgage?

If you can't produce a loan agreement, many banks will treat the money as a gift. This can reduce how much your child can borrow or complicate their mortgage application unnecessarily.

What Your University Loan Agreement Should Cover

A proper loan agreement doesn't need to be complicated. It just needs to be clear. Here's what to include:

1. The Loan Amount

Be specific about the total amount being lent. If you're helping with multiple expenses over time (bond now, laptop later, car in second year), document each amount separately or create one agreement with a maximum limit.

2. Repayment Terms

When do you expect repayment to start? Common options:

• After graduation: Gives them time to find work first

• Once they earn over a certain amount: For example, "repayments start when earning $50,000+ per year"

• Flexible schedule: "Minimum $200/month, more when possible"

The key is being realistic about what they can afford as a new graduate while ensuring you actually get paid back.

3. Interest Rate (If Any)

Many parents don't charge interest on university loans and that's fine. But you need to state this clearly: "0% interest."

If you do charge interest, even a nominal rate like 2-3%, document it. This makes it clear it's a genuine loan, not a gift.

4. What Happens If Things Change

Life doesn't always go to plan. What happens if:

• They drop out or change courses?

• They can't find work after graduating?

• They want to do postgraduate study?

Having these conversations upfront, and putting them in writing, prevents arguments later.

The Multiple-Child Fairness Factor

If you have more than one child, documentation becomes even more important.

Imagine this scenario: You lent your eldest $15,000 for university in 2020. Now your youngest is starting in 2025. How much did you lend the first time? Was it $12,000? $15,000? $18,000?

Without records, you're guessing. Your kids might remember different amounts. When it comes time to consider your estate planning, these fuzzy numbers can create serious family tension.

Documenting each loan clearly means:

• You can treat each child fairly

• There's no confusion about who owes what

• Your other children can see you're being evenhanded

• Your estate executor has clear records

Common University Loan Scenarios

Scenario 1: The Complete Package

You're lending $20,000 to cover:

• $3,000 rental bond

• $2,500 laptop

• $12,000 car

• $2,500 first-term expenses

What you need: One comprehensive loan agreement covering all expenses, with repayments starting one year after graduation at $300/month.

Scenario 2: The Staged Approach

You're helping with expenses as they come up:

• Bond now ($3,000)

• Laptop in six weeks ($2,500)

• Car next year (amount TBD)

What you need: Either a master agreement with a maximum loan amount of $20,000 that can be drawn down as needed, or separate agreements for each loan as it's given.

Scenario 3: The Part-Gift, Part-Loan

You're gifting $5,000 toward their education but lending another $10,000 for living expenses.

What you need: Clear documentation showing which money is a gift (no repayment) and which is a loan (repayment expected). This is crucial for Work and Income and relationship property purposes.

The Bank Question You Need to Answer Now

In three to five years, when your child applies for their first mortgage, the bank will ask them:

"Have you received financial help from family members? If so, was it a gift or loan?"

If it's a loan, the bank will want to see:

• The loan agreement

• Proof of repayments (if they've started)

• Current balance owing

Without this documentation, the bank may:

• Treat the money as a gift (affecting their borrowing capacity)

• Require a statutory declaration from you

• Ask for additional security

• Reduce the amount they're willing to lend

Having a proper agreement from day one makes this process straightforward instead of stressful.

The Tax Angle Nobody Talks About

If you're charging interest on a family loan over a certain amount, you need to declare that interest as income. Most parents either charge no interest or a nominal rate, but it's worth understanding the rules.

More importantly, if you later decide to forgive the loan, that forgiven debt can be considered a gift for tax purposes. This matters if your child is receiving Work and Income support or if you're planning residential care down the track.

What Happens If They Don't Pay You Back?

This is the conversation nobody wants to have, but it's important.

If your loan is properly documented and your child genuinely can't repay it, you may be able to claim it as a bad debt. Without documentation, you have no recourse and more importantly, no way to prove the money was ever meant to be repaid.

A loan agreement also gives you options:

• Adjusting the repayment schedule if they hit financial hardship

• Converting part of the loan to a gift if their circumstances change

• Treating the loan as an advance on their inheritance

All of these options are easier when you start with clear documentation.

The Amico Difference

Creating a proper loan agreement doesn't mean you don't trust your child. It means you're treating a significant financial transaction with the respect it deserves.

With Amico, you can:

• Create a legally binding loan agreement in 20 minutes

• Set clear, flexible repayment terms that work for your family

• Give your child a professional document they can show the bank

• Avoid awkward conversations years down the track

The cost? $15. Less than a couple of flat whites, and it could save thousands in future headaches.

Your University Loan Checklist

Before handing over money for university expenses:

✓ Agree on the total amount you're lending
✓ Decide when repayments will start
✓ Choose an interest rate (even if it's 0%)
✓ Discuss what happens if circumstances change
✓ Put everything in writing
✓ Keep a copy for your records
✓ Review the terms together annually

Amico can do all of this for you!

The Bottom Line

Helping your kids through university is one of the best investments you can make. But a verbal agreement isn't enough to protect either of you.

A simple loan agreement:

• Makes bank applications easier three years from now

• Treats all your children fairly

• Gives you both clarity on what's expected

• Protects your financial position

• Prevents family arguments

Your child is learning to be an adult. Teaching them that significant loans require proper documentation—even from family—is part of that education.

Set them up for success at university. Set yourself up for peace of mind. Get it in writing.

Ready to create your university loan agreement? With Amico, you can have a legally binding, bank-ready document in less time than it takes to fill out the university enrolment forms.

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