How Student Loans Work in Australia (2026 Guide)

Higher education in Australia is one of the most accessible in the world — largely because of the government-backed student loan system. Instead of paying tuition fees upfront, many eligible students use HECS-HELP or other HELP loans and repay them later once their income reaches a set level.

Recent reforms have changed how student loans work, including:

• A 20% reduction in eligible HELP debts
• Updated repayment thresholds and rates
• Changes to how indexation is calculated

In this guide, we explain how student loans work in Australia, who’s eligible, how repayments work in 2026, and what alternatives may exist if government support doesn’t cover all education costs.

We’ll also explain how a Credit24 personal loan may help cover education-related expenses not included in HECS-HELP, such as laptops, textbooks, travel, and living costs.

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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 commercial loans, Australian student loans:

• Are backed by the federal government
• Use income-contingent repayment
• Don’t charge traditional interest
• Are repaid through the tax system

The system is designed to support access to education regardless of financial background, while linking repayments to a graduate’s capacity to pay.¹

How Student Loans Differ from Commercial Loans

Since your CMS can’t display tables, here’s a simple comparison format.

Student loans (HELP):

• Repayments usually start only once income reaches a threshold
• Repayment amounts are based on income
• No traditional interest (indexation may apply)
• Repaid through the tax system
• Government-backed

Commercial loans:

• Repayments usually start immediately
• Fixed repayments based on loan terms
• Interest charged from day one
• Paid directly to the lender
• Credit assessed

This structure can reduce financial pressure during study and early career stages, but it’s still important to understand how repayments work over time.

Types of Student Loans in Australia

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

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 covers the student contribution amount, with the government subsidising the rest of the course cost.²

Key features:

• No loan fee
• Income-contingent repayment
• Indexed annually (not interest-bearing)

FEE-HELP

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

• Some undergraduate courses
• Most postgraduate courses

Key points:

• Covers tuition fees only
• Lifetime borrowing limit of $113,028 (cap subject to change each year; higher for medicine and dentistry)³
• Loan fee may apply for undergraduate courses

VET Student Loans (VSL)

VET Student Loans apply to:

• Approved diploma and advanced diploma courses
• TAFE and registered training organisations

Each course has a loan cap, and students must meet eligibility requirements.⁴

SA-HELP (Student Services and Amenities)

SA-HELP covers compulsory student services fees, such as:

• Student unions
• Sporting facilities
• Welfare and advocacy services

The SA-HELP maximum amount is indexed annually and may change each year.⁵

OS-HELP (Overseas Study)

OS-HELP supports eligible students undertaking:

• Overseas study exchanges
• Short-term international study

Places are limited and competitively allocated through universities.

How Do Student Loans Work in Australia?

Student loans follow a clear lifecycle:

1. Application

Students apply for HELP loans through:

• Their education provider
• The myGov / ATO system

Eligibility must be confirmed before the census date — the last date to withdraw without incurring a debt.⁶

2. Loan Disbursement

• Fees are paid directly to the provider
• The debt is recorded against your Tax File Number (TFN)
• You don’t receive cash for tuition fees

3. Indexation (Not Interest)

HELP debts do not accrue interest like bank loans.

Instead, they’re indexed annually to maintain real value. In recent years, indexation has been reformed to use the lower of CPI or WPI, which may reduce how quickly debts grow compared to previous calculations.⁷

Indexation generally applies:

• Once per year (1 June)
• Only to outstanding balances
• Not to new debts less than 11 months old

Understanding indexation is important for financial literacy, as it can affect how long your HELP debt remains outstanding.

Student Loan Eligibility in Australia

Citizenship and Residency

Eligible students may include:

• Australian citizens
• Permanent residents undertaking approved bridging study
• New Zealand citizens with a Special Category Visa (meeting residency criteria)
• Some humanitarian visa holders

Study Requirements

You generally must:

• Be enrolled in an approved course
• Meet minimum study load requirements (usually 25%)
• Satisfy progression rules (where applicable)

Different HELP loans have different eligibility criteria.⁸

Student Loan Repayment in Australia: 2026 Updates

When Do You Start Repaying?

You only repay your student loan when your repayment income exceeds the annual threshold.

Repayment thresholds are updated regularly, so for the most accurate 2025–26 and 2026–27 figures, it’s recommended to check the ATO’s latest repayment threshold tables.⁹

Repayments are:

• Automatic through PAYG withholding or tax returns
• Progressive (rates increase with income)

This structure helps repayments stay aligned with your earning capacity, but it’s still important to factor HELP debt into your budgeting and long-term financial planning.

Repayment Rates

Repayment rates generally range from 1% to 10% of income, depending on earnings.

Example (general only):

• A lower-middle income may result in a smaller repayment percentage
• A higher income may result in a larger repayment percentage

Exact repayment amounts depend on your income and current ATO repayment brackets.

The 20% HELP Debt Reduction

In 2024, the Australian Government legislated a one-off 20% reduction for eligible HELP debts incurred before 1 June 2023.¹⁰

Key points:

• Applied automatically
• Reduced balances for eligible borrowers
• Did not affect voluntary repayments already made

Even though this was introduced earlier, it may still be relevant in 2026 for borrowers reviewing their updated balances.

Voluntary Repayments

You can make voluntary repayments at any time:

• No penalties
• May reduce the impact of indexation over time
• No longer eligible for bonus discounts (removed in 2017)

Whether voluntary repayments are a good option depends on your personal budget and financial goals.

What Happens If You Move Overseas?

If you live overseas for 183+ days in a year, you must:

• Report income to the ATO
• Make repayments if income exceeds the overseas threshold

Failure to report can result in penalties.¹¹

Do Student Loans Affect Your Credit Score?

No. HECS-HELP and other government student loans do not appear on credit reports.

However, lenders may consider HELP debt when assessing borrowing capacity for:

• Home loans
• Personal loans

This is because HELP repayments can reduce your available income, which may affect how much you can borrow.

Are There Alternatives to Student Loans?

Student loans don’t cover all costs associated with study, including:

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

Alternatives may include:

• Scholarships and grants
• Youth Allowance / Austudy
• Family support
• Personal loans for education costs

If you're exploring alternatives, it’s important to compare options carefully and understand total repayment costs, fees, and your ability to meet repayments.

Credit24 Personal Loans: Bridging Your Education Funding Gap

When government student loans don’t cover everything, a Credit24 personal loan may help with education-related expenses such as:

• Laptops and study equipment
• Textbooks and learning materials
• Travel or relocation for placements
• Short-term living expenses while studying

How Credit24 Can Help Students

Depending on eligibility, Credit24 personal loans may offer:

• Personal loans up to $10,000
• Funding for costs not included in HECS-HELP
• Online application process
• Transparent pricing and responsible lending approach

Credit24 loans may be suitable for:

• Part-time students
• Postgraduate students
• International students (who are generally not eligible for HELP loans)

If you're considering a personal loan, it’s important to make sure repayments fit your budget and that you understand fees, charges, and loan terms.
Learn more about responsible lending:
https://www.credit24.com.au/about-us/responsible-lending/

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Student Loans in Australia: FAQs

How much can I borrow with HECS-HELP?

You can borrow up to the full student contribution amount for your course. There’s no overall cap for HECS-HELP, but course costs vary by discipline and provider.

When do I start repaying my student loan?

Repayments start when your income exceeds the annual threshold. Thresholds are updated regularly, so it’s best to check the ATO’s current repayment income thresholds for the latest figures.

What is the interest rate on student loans?

Student loans don’t charge interest. They’re indexed annually to inflation using CPI or WPI — whichever is lower.

Can I pay off my student loan early?

Yes. You can make voluntary repayments at any time with no penalties.

Can international students get HECS-HELP?

Generally no. Most international students must pay full fees upfront or explore private funding options.

What if I can’t afford repayments?

If your income falls below the threshold, repayments automatically stop. There’s no need to apply for hardship relief.

Sources

¹ Department of Education – Higher Education Loan Program
https://www.education.gov.au

² StudyAssist – HECS-HELP Overview
https://www.studyassist.gov.au

³ StudyAssist – FEE-HELP Loan Limits
https://www.studyassist.gov.au

⁴ VET Student Loans – Provider and Course List
https://www.employment.gov.au

⁵ StudyAssist – SA-HELP
https://www.studyassist.gov.au

⁶ ATO – Census Date Rules
https://www.ato.gov.au

⁷ Australian Government – HELP Indexation Reform
https://budget.gov.au

⁸ StudyAssist – Eligibility Requirements
https://www.studyassist.gov.au

⁹ ATO – HELP Repayment Thresholds
https://www.ato.gov.au

¹⁰ Australian Treasury – HELP Debt Reduction
https://treasury.gov.au

¹¹ ATO – Overseas HELP Repayment 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.