Study and Training Loans (HELP, SSL, ABSTUDY SSL and AASL)

The government offers financial support through loans for individuals pursuing higher education, trade apprenticeships, and various training programs. These loans are income contingent, meaning you must begin repaying them once your annual income surpasses the minimum repayment threshold, even if you are still studying.

How do study loans work?

When you lodge your tax return with an outstanding loan balance, the ATO calculates your annual compulsory repayment amount using a percentage of your repayment income*. This means that the more you earn, the greater your repayment obligation.

You can make voluntary repayments throughout the year to decrease your loan balance; however, these payments do not change the compulsory repayment calculated during your tax return. While these loans do not accrue interest, the ATO indexes any loan older than 11 months, which helps maintain the value of education in line with current educational costs.

How will indexation impact your study loan?

On 1st June each year, the ATO multiplies the loan balance by the current indexation rate and then adds that amount to the outstanding debt. This updated balance becomes the basis for calculating the compulsory repayment.

Repaying your study loan

Once you begin employment, you must inform your employer about your loan so they can withhold additional amounts from your salary to cover the expected repayment. These withheld amounts only apply to your loan balance after you file your tax return and the ATO determines the compulsory repayment. If the amount withheld exceeds the required repayment, you will receive a refund.

EXAMPLE: This breakdown helps Sally understand how her HELP loan repayment works for the 2022–2023 financial year, including indexation, repayment, and the potential tax refund.   Sally has a remaining HELP loan of $12,000 from studies undertaken between 2015 and 2017. On 1st June 2023, the HELP loan was indexed at 7.1% Indexation Amount: $12,000 x 7.1% = $852 New HELP Balance at at 1st June 2023: $12,000 + $852 = $12,852 Sally earned $60,000 for the 2022-2023 Financial Year, making her repayment rate 2.5% Repayment Obligation for 23FY tax return: $60,000 x 2.5% = $1,500 New HELP Balance after repayment: $11,352 outstanding   Sally did the right thing and advised her employer that she had a HELP loan Tax withheld by employer: $2,500 tax withheld throughout the year Tax refund: Since Sally’s actual repayment amount was only $1,500, she will receive a refund of $1,000.   What would have happened if Sally hadn’t informed her employer about her HELP loan? Sally would owe the full repayment amount of $1,500 when she lodged her 2023 tax return. (note: this example does not include other tax obligations)

 

You can check your current balance and make voluntary repayments anytime through ATO online services. However, if you have an outstanding debt or your income exceeds the threshold, you will still need to make a compulsory repayment.

You can make repayments to the ATO via BPAY, credit card, or through salary packaging with your employer. Once the ATO receives and processes these payments, they apply them to decrease your loan amount.

*Repayment income encompasses your taxable income, reportable fringe benefits, reportable super contributions, net investment losses (including rental losses), and any exempt foreign employment income. Note that this does not include any assessable amounts released from the first home super saver scheme.