Study Loan Indexation Rule Changes

Changes are coming to the way your study and training loans are indexed. The Australian Government has passed a new legislation that will affect how interest rates are applied to your loan balance and it could mean lower repayments for you. Below are the key changes to indexation:

The New Way Indexation is Calculated

Under the new rules, study and training loans (e.g. SFSS, HELP) will be indexed based on the lesser of the Consumer Price Index (CPI) or the Wage Price Index (WPI). This means you could see a smaller increase in your loan balance than before, as the rate applied will always be the lower of the two measures.

Backdated Changes

These changes are backdated to 1 June 2023. So, if you have or had a study or training loan at this date, here are the changes to previous indexation rates:

2023: Reduced from 7.1% to 3.2%
2024: Reduced from 4.7% to 4.0%

What Does This Mean for You?

Adjustments for Over-Indexed Amounts

If your loan has been over-indexed in the past two years, you're set to receive an adjustment for the excess amount. Once the adjustments are processed any overpayments made due to higher indexation will be credited to an ATO debt or refunded to you.

How Refunds Will Be Handled

Any excess indexation amount will first be credited back to your study or training loan. If there’s any remaining credit after this adjustment, it will be transferred to your Income Tax account (if applicable). Any leftover balance will be refunded directly to your nominated bank account.

What Do You Need to Do?

In most cases, you don’t need to do anything. If your loan was indexed over the past two years, the ATO will automatically adjust your loan balance and issue a refund if necessary. If you’ve nominated your bank account for refunds, you’ll receive the amount directly.

Who Will Receive a Refund?

The ATO won’t be able to confirm exactly who will receive a refund until all the adjustments are processed. This means there isn’t a specific list of people who will be affected until the adjustments are complete.

What Happens Next?

The ATO will begin processing the refunds and adjustments soon. Most people can expect to see these adjustments by the end of January 2025, but some more complex cases may take longer.

For more details on these changes, visit the ATO’s page on Study and Training Loans.