Changes to Compulsory Study Loan Repayments
As of 01 July 2019, the ATO have revised the compulsory repayment thresholds and repayment rates for the following study and training support loans:
- Higher Education Loan Program (HELP);
- VET Student Loan (VSL);
- Student Financial Supplement Scheme (SFSS);
- Student Start-up Loan (SSL);
- ABSTUDY Student Start-up Loan (ABSTUDY SSL); and
- Trade Support Loan (TSL).
The compulsory repayment is calculated by applying the associated repayment rate to your repayment income for a specified financial year (your repayment income being taxable income plus any net investment losses, reportable fringe benefit amounts, reportable super contributions and exempt foreign employment income). The table below illustrates the updated thresholds and repayment rates for the 2020 financial year:
If you believe you will be affected by the new decreased thresholds you can start planning now to minimise your tax payable at year end and reduce your study loan debt.
Your first option would be to make voluntary repayments toward your debt. The best time to do so is prior to 01 June in any given year, before the indexation increment is applied to the loan. You can request payment options from your accountant or via your MyGov login.
You can also request for your employer to withhold additional amounts from your salary and wage income to cover the compulsory repayment. If you are employed and have notified your employer of your loan, they will already be withholding additional amounts from your wage to cover the compulsory loan repayment, and you will need to advise that you would like a greater amount withheld. Alternatively, you will need to ask your employer for the required declaration form to allow them to withhold additional amounts from your wage to cover your compulsory repayment and any extra amounts you would like to contribute. Bear in mind that your take home pay will reduce by the additional amounts withheld.
Otherwise, you can use the ATO’s ‘Study and training support loans repayment calculator’ in the following link to estimate your compulsory loan repayment and start saving now!: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=STLoanRepay#STLoanRepay/questions.
If you wish to discuss planning strategies, request payment options, or find out further information relating to your study debts please do not hesitate to contact one of our advisors on (07) 5504 5700.