New Bill Passed: Changes to Study and Training Loan Indexation

Dec 6, 2024 | 24-25 Financial Year, Student Loans

New Student & Training Loan Bill Passed

A significant update is on the horizon for anyone with a study or training loan. Parliament has passed a bill that changes how annual indexation is calculated for these loans, and while it still awaits Royal Assent, here’s what you need to know.

Once the change becomes law, indexation for study and training loans will be calculated based on the lower of two measures: the Consumer Price Index (CPI) or the Wage Price Index (WPI). This is a welcome shift for many, especially considering the steep indexation rates of recent years.

What’s Changing?

The new rules are backdated to take effect from 1 June 2023, which means lower indexation rates for the past two years:

  • 3.2% for 1 June 2023, down from the original 7.1%
  • 4.0% for 1 June 2024, down from the original 4.7%

This change aims to provide some financial relief for those with study and training loans by keeping annual increases more manageable.

What Does This Mean for You?

Here’s the good news: for most people, no action is required. The ATO is already working to recredit excess indexation amounts directly to affected loan accounts.

If your account is in credit after this adjustment:

  1. The excess credit will be transferred to your Income Tax account.
  2. It will then be used to offset other tax or Commonwealth debts (if applicable).
  3. Any remaining credit will be refunded to your nominated bank account.

Key Timelines to Note

  • Most credits should appear in accounts by the end of January 2025, though some adjustments may take longer due to processing complexities.

For Clients of TSP Accountants

If you’ve nominated our bank account for refunds, we’ll reconcile the amounts and ensure everything is in order. However, we recommend reviewing your details:

  • Update your bank account details to ensure any refunds are processed directly to your personal account for faster access.
  • If you’re unsure how to update your information, reach out to us for assistance.

How Can TSP Help?

At TSP Accountants, we’re here to guide you through these updates. If you’d like help reviewing your study or training loan account or updating your financial details with the ATO, please don’t hesitate to get in touch.

Stay informed, and let’s make sure you’re getting the full benefit of these new changes.