Tips For Reducing A Study Loan Balance

Don’t let increasing indexation on study and training loans catch you unaware this year.

You can reduce your study loan balance by utilising following strategies –

• Let your employer know if you have started studying or have a study loan.
• Check the amount your employer is withholding. Is there enough withheld to cover their compulsory repayment? If not, you can ask your employer to increase the withholding amount. This will reduce your chances of getting a tax bill.
• Advise your employer to calculate the correct withholding amount using the repayments calculator.
• Check your loan balance. You can do this anytime by logging onto ATO online services via myGov. You can also find payment reference number (PRN) and voluntary repayment options.
• Make a voluntary repayment to reduce your total loan amount. Indexation on the loan is applied on 1 June, so a voluntary repayment prior to this date will reduce the balance that indexation is applied to. It may take a few business days for ATO to receive and process the payment.

Indexation won’t apply to study or training loan on 1 June if the balance is $0. Any loan debt over 11 months old will be subject to indexation.

The compulsory repayment threshold for the 2022-23 financial year is $48,361. If you earn over this amount, you will be subject to a compulsory repayment. ATO will work out the repayment amount once you lodge your tax return and include it on your notice of assessment.