Study loan repayment calculator
Your compulsory study loan repayment, and how indexation affects the balance over time.
Compulsory repayment this year
Estimate$3,750.00
144 a fortnight, withheld from your pay
- Cleared in
- 8 years
- Indexation added
- $5,358.38
- Share of income
- 4.08%
| Repayment income | $92,000 |
|---|---|
| Threshold | $67,000 |
| Loan balance | $34,000 |
| Repayment | -$3,750.00 |
- Indexation of 3.2% is applied on 1 June, before that year's repayments are credited.
Repayments are withheld through the tax system and apply only above a threshold — $67,000 in Australia — so a $92,000 income is charged on $25,000 of it.
Over the life of it
How this is calculated
Income-contingent repayment
Nothing is payable below an income threshold — $67,000 in Australia. Above it a percentage of the excess is collected through the tax system rather than as a separate loan payment, so the repayment moves with what you earn.
repayment = Σ (slice above threshold) × band rateIndexation is not interest
Most systems index the balance annually rather than charging interest. It still grows: at 3.2% a $34,000 balance gains about $1,088 in a year, which a small repayment may not cover.
Repayment income is broader than salary
The test usually adds fringe benefits, employer retirement contributions and investment losses back onto taxable income. Sacrificing $12,000 into super cuts your income tax and leaves the repayment exactly where it was.
Worked example: A $92,000 salary against a $34,000 balance
| Income | $92,000 |
|---|---|
| Balance | $34,000 |
| Repayment | Set by your country’s scale |
|---|---|
| Indexation | Applied annually to the balance |
Thresholds, rates and indexation all differ by country, and each changes the payoff date by years. Pick a country above for figures you can act on.
What this assumes
- Income grows at the rate entered every year.
- No voluntary repayments are made.
- Indexation continues at the current rate.
- The loan is the only study debt held.
Where this commonly goes wrong
- Repayment income is usually a broader measure than salary, so salary sacrifice and fringe benefits rarely reduce it.
- Indexation can outpace repayments on a large balance at a low income, which is how a balance grows despite years of payments.
- Employer withholding is calculated per pay period, so a bonus month over-withholds and a variable income under-withholds.
Questions
How do income-contingent loans work?
Nothing is payable below an income threshold. Above it, a percentage of income is collected through the tax system, so the repayment rises and falls with what you earn rather than being a fixed instalment.
Does the balance grow if I do not repay?
Usually yes. Most systems index the balance annually to inflation or a similar measure, which is not interest but does mean a balance left alone grows in nominal terms.
Can I pay it off early?
Almost always, and it is worth doing just before the annual indexation date if you are going to. Whether it beats other uses of the money depends on the indexation rate against your other borrowing costs.
Related tools
Sources
General estimate based on published ATO rates for the the current period. Not tax advice, and it does not consider your objectives, financial situation or needs. Confirm your position with the ATO or a registered tax agent.
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