Student Loans – Avoid Collections Panic (2026 Guide)

As a student in Australia, you may be faced with the challenge of managing student loans. What happens when these loans become unmanageable? One pressing concern is whether student loans can go to collections, and understanding this can be pivotal in safeguarding your financial future.

Understanding Student Loan Collections

In Australia, student loans are primarily provided through the Higher Education Loan Program (HELP). These loans are unique as they are income-contingent, meaning repayments are automatically deducted from your salary once you earn above a certain threshold. However, failing to manage these repayments can still lead to complications, including the potential for your loan to go to collections.

While HELP debts are managed by the Australian Taxation Office (ATO) and do not typically go to private debt collectors, there are specific scenarios where collection actions might be applied. These can include non-compliance with taxation obligations or moving overseas and neglecting to manage your HELP debt properly.

Current Market Information and Key Considerations

It's crucial to stay informed about current rates and repayment thresholds. In 2026, the compulsory repayment threshold for HELP loans is set at $48,361. Once your income exceeds this amount, your employer will start deducting repayments from your salary.

Here's a look at the 2026 repayment rates based on income levels:

Understand that HELP debts are indexed each year in line with the Consumer Price Index (CPI), which can affect the total amount you owe over time. In recent years, the indexation rate has ranged from 1.8% to 3.3%, but it can vary depending on economic conditions.

Steps to Manage and Prevent Student Loan Collections

To ensure your student loans don't become a burden, follow these steps:

1. Stay Informed: Regularly check your HELP debt balance and understand how much is deducted from your salary. The ATO portal provides detailed information.
2. Notify the ATO When Moving Overseas: If you plan to live overseas for more than six months, you must notify the ATO to arrange repayments, as they use a different threshold for international income.
3. File Tax Returns Promptly: Ensuring you file your tax returns on time helps avoid complications with repayment calculations.
4. Consider Voluntary Repayments: If financially feasible, making voluntary repayments can reduce your debt faster and decrease the impact of indexation.
5. Seek Professional Advice: If you're struggling, consulting with a financial advisor or a company like Esteb and Co can provide tailored advice from their panel of 83+ lenders.

Expert Tips and Considerations

Here are some expert tips to help you manage your student loans effectively:

• Budget Wisely: Create a budget that accommodates your loan repayments and other essential expenses.
• Monitor Changes in Legislation: Government policies can change, affecting repayment rates and thresholds. Stay informed to respond quickly to any changes.
• Use ATO Tools: The ATO offers online tools and calculators to help you estimate your repayments and plan accordingly.
• Communicate with Employers: Ensure your employer is aware of your HELP debt status to make the appropriate payroll deductions.

Frequently Asked Questions

1. Can my HELP debt go to private collections?
No, HELP debts are managed by the ATO and do not go to private debt collectors. However, failing to meet obligations could result in ATO collection actions.

2. What happens if I move overseas?
You must report your worldwide income to the ATO, and repayments will be based on the international repayment threshold.

3. Can I pay more than the compulsory repayment?
Yes, voluntary repayments are allowed and can reduce the impact of indexation on your debt.

4. What if I can't afford repayments?
Contact the ATO to discuss your situation. They may offer options to manage your repayments effectively.

5. How does indexation affect my HELP debt?
Indexation increases your debt balance annually based on the CPI, which can lead to higher repayments over time.

6. Are there any penalties for late repayments?
The ATO does not impose penalties on HELP debts, but failing to meet tax obligations can lead to broader financial penalties.

7. Can Esteb and Co help with student loans?
While Esteb and Co specialises in mortgage broking, they can provide access to financial advisors who may offer guidance on managing student loans effectively.