A loan cap is the maximum amount a student can borrow as a VET Student Loan for a course.
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There are 3 levels of loan amounts (‘loan cap bands’) for courses. The loan cap applies no matter how the course is delivered (face to face, online or mixed). Loan caps vary each year through indexation and changes to the VET Student Loans (Courses and Loan Caps) Determination 2016 [part 36].
The Determination sets out the loan caps for approved courses at the time the loan is approved. This amount is indexed annually from 1 January. The indexed amounts of the loan caps for each year are published in VET Student Loans Course Caps Indexed Amounts (Providers). The Minister may amend the Determination over time to add or remove courses or change the loan cap for certain courses.
The loan cap that applies is the amount specified in the Determination at the date of the student’s enrolment and loan application. Any changes to the loan cap after the date of a student’s enrolment and loan application that reduce the loan cap do not affect the student’s loan cap for the course (see example below).
It is your responsibility to check with students who are transferring from another provider to find out how much of the loan cap remains available to them.
In most cases where a replacement course [part 17] is added to the Determination, the replacement course will have the same loan cap as the superseded course. However, this may not always be the case. For example, a later amendment may add the replacement course to the Determination with a higher loan cap. If the superseded course (which had a lower cap) has been removed from the Determination but is still in teach-out or transition, the higher cap will not apply to it.
You can set tuition fees [part 19] above the loan cap. The loan cap is just a ceiling on the amount the government will lend a student for tuition fees for the course. The student will need to pay the difference (gap fee [part 22]) to you. You must evenly spread the tuition fees over the fee periods [part 25] for a course. This rule applies to gap fees as well as to tuition fees that are covered by VSL.
The loan cap changes each year because of indexation. The relevant loan cap amount for a course is the indexed amount in the year of study – not the year the student submitted their eCAF and not the cap amount shown on the eCAF.
Example
A student commences an approved course and has a loan approved in 2024 with a loan cap of $15,000. They continue their enrolment in that course in 2025.
In 2025, the Determination is amended, and the loan cap for that course is changed to $10,000. Because the student enrolled in 2024, they remain entitled to the $15,000 cap that applied in 2024. However, any student enrolling in the course or requesting a loan after the loan cap is changed to $10,000 is only eligible for a $10,000 VET Student Loan for the course.
35.1 - Indexation of loan caps
Maximum loan caps for courses are adjusted (indexed) on 1 January each year in line with the Consumer Price Index. The department does this by multiplying the cap amount by the indexation factor for the relevant year.
The relevant loan cap amount for a course is the indexed amount in the year of study – not the year the student submitted their eCAF and not the cap amount shown on the eCAF (see example below).
From 1 January each year the eCAF system automatically applies the indexed amount to existing loans. It also automatically increases the loan cap for courses that are approved in one year and continuing into the next year. This means that students don’t need to reapply to access the increased (indexed) amount each year after their loan is approved.
Example
A student submits an eCAF in July 2024 with a course cap of $6,031. The student is still studying in 2025. For census days that occur in 2025, the course cap that applies is now the indexed amount. The original eCAF cannot be amended or deleted. Wording in the eCAF tells students:
You request that the Government:
- varies the amount of your VET Student Loan on each occasion that the course cap for your course is increased with indexation or otherwise, so as to make available to you those increases in the loan cap for your course …
35.2 - Loan caps for students transferring to another provider
If a student transfers to another provider and continues to study the same course, their loan cap does not ‘re-set’ - it remains the same. They can only access a VET Student Loan to continue their course up to the remainder of the total loan cap.
When you create an eCAF for the student, the ‘Applicable Loan Cap’ field will be pre-filled with the loan cap amount. It won’t show the available remaining loan cap for that individual student.
If the loan cap changes before the student submits their eCAF (for example, updated for indexation on 1 January), the system will automatically use the new cap amount. You need to ask the student to provide copies of the Commonwealth Assistance Notices [part 43.3] that they received from the first provider. Use these to check the amount of VSL the student has already used for the course.
If the student has accessed a VET Student Loan through an earlier provider and is continuing to study the same course with you, you should ask the student:
- when they applied for the loan for the course (to verify the loan cap that applied at the time)
- how much of the loan they’ve accessed to date.
You can check the remaining HELP balance [part 39] for any student. This should supplement or confirm the student information.