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VET Student Loans are income contingent loans. This means repayment of your loan is managed through the Australian tax system and compulsory repayments are based on your income.
The Australian Taxation Office (ATO) manages all VET Student Loan repayments.
If you have a VET Student Loan you must notify your employer via a Tax File Number (TFN) declaration or Withholding Tax declaration form. Under the pay as you go (PAYG) withholding system your employer will withhold an additional amount from your pay which will go towards your compulsory repayment.
You must start repaying your debt through the tax system once your income is above a certain level. We call this the ‘compulsory repayment threshold’. The compulsory repayment threshold is adjusted each year. You can view the current and past repayment thresholds at Study and training loan repayment thresholds and rates | Australian Taxation Office (ato.gov.au).
The amount you repay each year through your compulsory repayment is a percentage of your income. It increases as your income increases, so the more you earn, the higher your repayment will be.
The ATO will calculate your compulsory repayment for the year and include it on your income tax notice of assessment. You can work out the amount you’ll need to repay by using the Study and Training Loan Repayment Calculator and the repayment rates on the ATO website.
Compulsory repayments are calculated annually when you lodge your tax return. You must make compulsory repayments even if:
- you’re still studying
- you’ve moved overseas.
If you move overseas, you must update your contact details through ATO online services within 7 days of leaving Australia.
You will only ever be contacted by the Australian Taxation Office regarding the repayment of your loan. See When you must repay your loan | Australian Taxation Office (ato.gov.au).
11.1 Voluntary repayments
You can make a voluntary repayment toward your VET Student Loan at any time and for any amount to reduce the balance of your loan. If you make a voluntary repayment, you may still be required to make a compulsory repayment through your tax return. Voluntary repayments are made in addition to, not instead of, a compulsory repayment.
Voluntary repayments are made to the Australian Taxation Office. There are several ways you can make a voluntary repayment, including BPAY and by credit card. You can also make a repayment through myGov.
For more information on making a repayment, see Voluntary repayments | Australian Taxation Office (ato.gov.au).