How Student Loans Work in Australia (2026 Guide)

Australia’s higher education system includes government-backed loan programs that allow many eligible students to defer some tuition costs rather than paying them upfront. Instead of paying all tuition fees at the time of enrolment, eligible students may use HECS-HELP or other loans under the Higher Education Loan Program (HELP) and repay them later once their income reaches a certain level.

Recent reforms have changed how student loans work, including updates to repayment thresholds and changes to how indexation may be calculated. These settings can change over time, so it is important to refer to official government sources for the most current rules.

In this guide, we explain how student loans work in Australia, who may be eligible, how repayments operate, and what funding options may be considered if government support does not cover all education costs.

What Are Student Loans in Australia?

Student loans in Australia are primarily government-funded loans designed to help eligible students pay for higher education without needing to pay the full tuition cost upfront.

Unlike many commercial loans, Australian student loans:

• Are administered by the Australian Government
• Use income-contingent repayment
• Do not charge commercial interest
• Are repaid through the tax system

Although HELP debts do not accrue traditional interest, outstanding balances are indexed annually to maintain their real value.

These programs allow eligible students to defer certain education costs while linking repayments to income levels.

How Student Loans Differ from Commercial Loans

Student loans (HELP):

• Repayments generally begin only once income reaches a repayment threshold
• Repayment amounts are based on income levels
• Do not charge commercial interest (balances are indexed annually)
• Repayments are generally collected through the tax system
• Administered by the government

Commercial loans:

• Repayments usually begin shortly after the loan is issued
• Repayments are fixed based on loan terms
• Interest is charged on the loan balance
• Payments are made directly to the lender
• Credit eligibility assessments apply

While government student loans allow repayment to be linked to income, it is still important to understand how balances can change over time due to indexation.

Types of Student Loans in Australia

Australia’s student loan system operates under the Higher Education Loan Program (HELP), which includes several types of loans.

HECS-HELP (Higher Education Contribution Scheme)

HECS-HELP is the most common student loan in Australia.

It applies to:

• Undergraduate students
• Commonwealth Supported Places (CSPs)
• Approved universities and higher education providers

HECS-HELP allows eligible students to defer payment of the student contribution amount while the government subsidises part of the course cost.

Key features include:

• No loan fee
• Income-contingent repayment
• Annual indexation rather than interest

FEE-HELP

FEE-HELP is designed for full-fee-paying domestic students, including:

• Some undergraduate courses
• Most postgraduate courses

Key points:

• Covers tuition fees only
• Lifetime borrowing limits apply (limits are indexed periodically and may change)
• Loan fees may apply to some undergraduate courses

VET Student Loans (VSL)

VET Student Loans are available for certain vocational education and training programs, including:

• Approved diploma courses
• Approved advanced diploma courses
• Courses delivered by eligible training providers such as TAFE and registered training organisations

Each course has a maximum loan cap and eligibility requirements must be met.

SA-HELP (Student Services and Amenities)

SA-HELP assists students with the student services and amenities fee, which may fund services such as:

• Student representation
• Sporting and recreational facilities
• Welfare and advocacy services

The maximum SA-HELP amount is indexed annually.

OS-HELP (Overseas Study)

OS-HELP loans support eligible students who undertake:

• Overseas exchange programs
• Short-term international study opportunities

Availability and allocation are generally managed through universities.

How Do Student Loans Work in Australia?

Student loans generally follow a structured process.

1. Application

Students typically apply for HELP loans through:

• Their education provider
• The government’s online systems linked to the Australian Taxation Office (ATO)

Eligibility must usually be confirmed before the census date, which is the last date students can withdraw from a unit without incurring a HELP debt.

2. Loan Disbursement

For most HELP loans:

• Tuition fees are paid directly to the education provider
• The debt is recorded against the student’s Tax File Number (TFN)
• Students usually do not receive cash payments for tuition fees

3. Indexation (Not Commercial Interest)

HELP debts do not accrue commercial interest like many bank loans.

Instead, the balance is indexed annually to maintain its real value over time.

Indexation generally:

• Occurs once per year (usually on 1 June)
• Applies to outstanding balances
• Does not apply to very recent debts added shortly before the indexation date

Indexation rules may change based on government policy settings.

Student Loan Eligibility in Australia

Citizenship and Residency

Eligible students may include:

• Australian citizens
• Certain New Zealand citizens who meet residency requirements
• Some humanitarian visa holders
• Certain permanent residents undertaking approved bridging study

Eligibility rules vary depending on the specific HELP loan.

Study Requirements

Students generally must:

• Be enrolled in an approved course
• Meet minimum study load requirements (often at least 25% of a full-time load)
• Satisfy academic progression rules where applicable

Each HELP loan program has its own eligibility criteria.

Student Loan Repayment in Australia

When Do You Start Repaying?

Repayments begin when a borrower’s repayment income exceeds the annual threshold.

These thresholds are updated periodically by the government. For the most current figures, it is recommended to check the Australian Taxation Office’s repayment threshold tables.

Repayments are generally:

• Collected automatically through the tax system
• Calculated as a percentage of income
• Adjusted as income increases

Repayment Rates

Repayment rates typically range from a small percentage of income at lower thresholds to higher percentages at higher income levels.

For example:

• Lower income levels may result in smaller repayment percentages
• Higher incomes may result in larger repayment percentages

The exact repayment amount depends on current income thresholds and rates set by the government.

Voluntary Repayments

Borrowers may choose to make voluntary repayments at any time.

Key points:

• No penalties generally apply for voluntary repayments
• Voluntary payments may reduce the balance subject to future indexation
• Bonus repayment discounts previously available were removed in 2017

Whether voluntary repayments are appropriate depends on an individual’s financial circumstances.

What Happens If You Move Overseas?

Borrowers who move overseas for extended periods (generally 183 days or more in a year) may be required to:

• Notify the Australian Taxation Office
• Report worldwide income
• Make repayments if income exceeds the applicable threshold

Failure to report income may result in penalties.

Do Student Loans Affect Your Credit Score?

Government HELP loans generally do not appear on standard consumer credit reports.

However, some lenders may consider existing HELP debt when assessing borrowing capacity for products such as:

• Home loans
• Personal loans

This is because HELP repayment obligations may reduce available income.

Are There Alternatives to Student Loans?

Government student loans do not cover every cost associated with studying. Additional expenses may include:

• Living expenses
• Textbooks and learning materials
• Laptops and equipment
• Relocation or placement costs

Possible funding options may include:

• Scholarships and grants
• Government income support such as Youth Allowance or Austudy
• Personal savings
• Family support
• Other regulated consumer credit products

Anyone considering borrowing should carefully review loan terms, fees, interest rates, and repayment obligations.

Considering Other Funding Options

Some people explore additional funding options if government student loans do not cover all study-related expenses.

Examples of study costs that may require additional funding include:

• Laptops or study equipment
• Textbooks and learning materials
• Travel or relocation costs for placements
• Living expenses during study

If considering any form of borrowing, it is important to ensure repayments are manageable and to understand all loan terms, fees and charges before entering into a credit contract.

Learn more about responsible lending:
https://www.credit24.com.au/about-us/responsible-lending/

Student Loans in Australia: FAQs

How much can I borrow with HECS-HELP?

Eligible students can defer the student contribution amount for their course. The total amount depends on the course, institution, and government funding band.

When do I start repaying my student loan?

Repayments begin once your income exceeds the annual repayment threshold set by the government.

What is the interest rate on student loans?

HELP loans do not charge commercial interest. However, the outstanding balance is indexed annually.

Can I repay my student loan early?

Yes. Voluntary repayments can generally be made at any time.

Can international students get HECS-HELP?

Most international students are not eligible for HECS-HELP and are usually required to pay tuition fees upfront or arrange alternative funding.

What if I cannot afford repayments?

If your income falls below the repayment threshold, compulsory repayments are generally not required for that period.

Sources

Department of Education – Higher Education Loan Program
https://www.education.gov.au

StudyAssist – HECS-HELP Overview
https://www.studyassist.gov.au

StudyAssist – FEE-HELP Loan Limits
https://www.studyassist.gov.au

VET Student Loans – Course and Provider Information
https://www.employment.gov.au

StudyAssist – SA-HELP
https://www.studyassist.gov.au

Australian Taxation Office – HELP Repayment Thresholds
https://www.ato.gov.au

Australian Government – HELP Indexation Information
https://budget.gov.au

Australian Taxation Office – Overseas HELP Obligations
https://www.ato.gov.au

Disclaimer

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is general in nature and does not consider your objectives, financial situation, or needs. Lending criteria, fees, and charges apply. For product details, eligibility requirements, and full terms and conditions, visit www.credit24.com.au.