Payroll & super
What is STSL?
Study and Training Support Loans (HELP / HECS)
STSL is the ATO umbrella for compulsory repayments of government study debts, including HELP (formerly HECS) and VET Student Loans, collected through the tax system. Since 2025-26 repayments have been marginal: for 2026-27 that means nothing on the first $69,528 of repayment income, then 15 cents per dollar up to $129,717, with higher bands above.
How STSL repayments work
FY2025-26 rebuilt the repayment system. Under the old rules, crossing the threshold meant paying a percentage of your entire repayment income, so one extra dollar of income could cost hundreds in repayments. The new marginal system, legislated through the Universities Accord changes, works like income tax brackets. For 2026-27: repayment income up to $69,528 attracts nothing; income from $69,529 to $129,717 is charged at 15 cents per dollar over the threshold; from $129,718 the charge is $9,028 plus 17 cents per dollar over $129,717; and above $186,050 the repayment equals a flat 10% of your whole repayment income.
Repayment income is broader than taxable income: it adds back reportable fringe benefits, reportable super contributions, net investment losses and exempt foreign employment income, so salary packaging and negative gearing do not reduce what you repay. The same reform package also cut every outstanding HELP debt by 20% (applied from 1 June 2025) and changed indexation to the lower of CPI and wage growth. Current thresholds are on the ATO STSL rates and thresholds page; the threshold is indexed every year, which is why it moved from $67,000 in 2025-26 to $69,528 in 2026-27, so check it each new financial year.
Why it matters for small business
As an employer, STSL is a withholding obligation. When an employee ticks the study and training support loan question on their tax file number declaration, you must withhold an extra STSL component on top of normal PAYG, using the ATO's Schedule 8 tables (new tables applied to payments from 24 September 2025 to implement the marginal system). Payroll software handles the calculation, but the flag has to be set: miss it and the employee faces a tax-time debt; leave it on after they tell you the loan is paid off and you are over-withholding their pay. STSL withholding applies only when a TFN is provided and travels through your normal PAYG remittance on the BAS or IAS.
For sole traders the mechanics are different: no one withholds for you, so the compulsory repayment lands as a lump on your notice of assessment. A sole trader whose repayment income comes in at $95,000 owes $3,820.80 at assessment, on top of income tax and any Medicare levy, and PAYG instalments do not automatically cover it. Put the expected repayment aside during the year. Estimate a repayment with the OneBookPlus HECS-HELP repayment calculator.
2026-27 repayment bands and a worked example
| Repayment income (2026-27) | Compulsory repayment |
|---|---|
| Up to $69,528 | Nil |
| $69,529 to $129,717 | 15c for each $1 over $69,528 |
| $129,718 to $186,050 | $9,028 plus 17c for each $1 over $129,717 |
| Above $186,050 | Flat 10% of total repayment income |
Worked example: an employee earns $85,000 of repayment income in 2026-27. Repayment: ($85,000 - $69,528) x 15% = $2,320.80, roughly 2.7% of their income. Under the old whole-of-income design the same person would have paid a percentage of the full $85,000, so the marginal system leaves low-to-middle earners with study debts meaningfully better off each year.
Note the repayment reduces your loan balance only after your tax return is assessed; the extra amounts withheld from each pay sit with the ATO as credits until then. Voluntary repayments can be made any time on top and now simply reduce the balance before indexation is applied on 1 June.
Run your own STSL numbers
The definitions above only get you so far; the free OneBookPlus HECS-HELP repayment calculator turns them into your own figures in seconds, no sign-up needed.
STSL frequently asked questions
Does HECS still exist, or is it all called STSL now?
The scheme most people call HECS became HELP (Higher Education Loan Program) in 2005. STSL is the ATO's collective label covering HELP plus VET Student Loans, Student Start-up Loans and similar schemes, because all are repaid through the same thresholds and the same extra withholding. On payslips and TFN declarations you will usually see STSL.
What income counts toward the $69,528 repayment threshold?
Repayment income, which is taxable income plus reportable fringe benefits, reportable (salary-sacrificed) super contributions, net investment losses and exempt foreign employment income. This is why salary packaging a car or negatively gearing a property does not lower your compulsory repayment even though it lowers taxable income.
As an employer, what do I do when a new employee has a study loan?
Set the STSL flag in payroll when their TFN declaration indicates a loan. Your software then adds the Schedule 8 STSL component to normal PAYG withholding each pay and it is remitted with your usual withholding. When the employee advises the debt is repaid, remove the flag from the next pay run so you stop over-withholding.
Last reviewed and updated: by Bishal Shrestha