If you have been comparing diploma courses, you have probably read that a VET Student Loan is “expensive” because of the 20% loan fee. That part is true, and we will show you exactly what it adds. But the total is only half the story. For most people, the bigger questions are when you pay, how much each week, and what happens if your income is low. This guide sets out the real 2026–27 numbers so you can decide for yourself.
The short answer
- A 20% loan fee is added for full-fee students, so a $7,995 course becomes $9,594 of loan debt.
- You pay nothing upfront and nothing while you study.
- You repay nothing until your income passes $69,528 a year (2026–27).
- Above that you repay 15% of the income over $69,528. On a $75,000 salary that is about $16 a week, taken through the tax system.
- There is no interest. The balance is indexed once a year by the lower of inflation or wage growth (2.8% in June 2026).
- In total dollars it costs more than paying upfront. What you get for that is $0 now and repayments that only start, and only grow, as your income does.
Important: A VET Student Loan gives rise to a VETSL debt, which continues to be a debt owed to the Commonwealth until it is repaid. A VET Student Loan will not be approved for students who do not meet the eligibility requirements. Maximum tuition fees for TrainSmart’s VSL-approved courses are listed below. SMR Learning Services Pty Ltd trading as TrainSmart Australia, RTO 51771.
What is a VET Student Loan?
A VET Student Loan (VSL) is an Australian Government loan that pays your tuition fees for an approved diploma or advanced diploma. It sits in the same HELP system as university HECS. The government pays your fees to your training provider, and you repay the loan later through the tax system once your income is high enough.
It is a real loan and it must be repaid. It is not a grant and it is not free. But it works very differently from a personal loan or a payment plan, and that difference is what this guide is about.
The 20% loan fee, explained honestly
If you are a full-fee-paying student (not subsidised by your state government), a loan fee of 20% of the amount you borrow is added to your debt. You do not pay it upfront; it is simply added to what you owe.
Example: a $7,995 diploma paid with a VET Student Loan becomes a debt of $9,594 ($7,995 plus a $1,599 loan fee). The loan fee does not count towards your loan cap.
This is the figure competitors point to, and it is a fair point. If you have the savings to pay upfront, that will always be the cheapest way to pay. The question is what the loan fee buys you if you don’t.
How repayments actually work in 2026–27
You only start repaying once your yearly repayment income is above the threshold, which is $69,528 for 2026–27. Since July 2025 repayments are worked out on a marginal basis: you repay a share of the income above the threshold, not a percentage of your whole salary. For most graduates that share is 15%.
Your employer withholds a little from each pay, and it is settled when you lodge your tax return. There is no separate bill to pay.
| Your yearly income | Repaid per year | About per week |
|---|---|---|
| Up to $69,528 | $0 | $0 |
| $75,000 | $821 | $16 |
| $80,000 | $1,571 | $30 |
| $85,000 | $2,321 | $45 |
| $95,000 | $3,821 | $73 |
Compulsory repayment = 15% of repayment income over $69,528 (2026–27 ATO rates; higher rates apply above $129,717). Repayment income can include reportable super contributions, fringe benefits and net investment losses, so it may differ from your salary. Figures are examples only and the government sets thresholds each year.
To put that in context, a graduate earning $75,000 repays about $16 a week. A typical fee-for-service instalment plan for a diploma costs around $77 to $80 a week, starting from the week you enrol, whether or not you are working yet.
Three ways to pay, side by side
Here is a $7,995 diploma (such as Counselling, Community Services or Mental Health) paid three different ways.
| Pay upfront | Interest-free plan | VET Student Loan | |
|---|---|---|---|
| Before you start | Full amount | First instalment | $0 |
| While you study | Nothing more | About $80 a week | $0 |
| If you earn under $69,528 | n/a | Still due every week | $0 |
| Once earning $75,000 | n/a | Usually finished | About $16 a week |
| Total you pay | Lowest (TrainSmart currently offers 15% off upfront) | $7,995 | $9,594 plus yearly indexation, paid over time |
So, is a VET Student Loan worth it?
It depends on your situation, and that is the honest answer.
- If you have savings, paying upfront is the cheapest option.
- If you have a steady income now and can comfortably spare around $80 a week, an interest-free plan avoids the loan fee.
- If you don’t have savings, or you won’t be working full time while you study, a VET Student Loan means no weekly bills now. You only start repaying once you are earning over $69,528, and the amount you repay rises and falls with your income.
Because indexation is capped at the lower of inflation or wage growth, the debt does not grow faster than prices or pay the way a credit card or personal loan can. You can also make voluntary repayments to the ATO at any time if you want to clear it sooner.
Common questions
Will it affect a home loan? Lenders consider your HELP and VET Student Loan repayments when working out how much you can borrow. Rules have been easing for borrowers who will repay their debt soon, but every lender is different, so speak to your lender or broker.
What if my income drops? Compulsory repayments are based on each year’s income. In any year your repayment income is $69,528 or less (2026–27), no compulsory repayment is due. The debt remains until it is repaid.
Is there interest? No. The balance is indexed on 1 June each year by the lower of the Consumer Price Index or the Wage Price Index. The rate was 2.8% in June 2026.
Will the government cut my debt again? In 2025 the government applied a one-off 20% reduction to existing student debts. There is no promise of future cuts, so don’t plan on one.
TrainSmart courses approved for VET Student Loans
These diplomas are available online across Australia, and several in Perth. Maximum tuition fees are shown.
- CHC51015 Diploma of Counselling – $7,995
- CHC52025 Diploma of Community Services (Case Management) – $7,995
- CHC53315 Diploma of Mental Health – $7,995
- CHC50425 Diploma of Youth Work – $7,495
See every approved course and its maximum fee on our VET Student Loans page.
Who can get a VET Student Loan?
In general you need to be an Australian citizen, or a permanent humanitarian visa holder or eligible New Zealand citizen who usually lives in Australia; be enrolled in a VSL-approved course with an approved provider; and meet the academic suitability requirements. Our career advisors can take you through the criteria and all your payment options, including paying upfront or by instalments.
Talk it through with us
Not sure which way to pay? Call our career advisors on 1300 855 517 or get the free course guide from any course page, and we’ll walk you through the fees and payment options for your situation.
A VET Student Loan gives rise to a VETSL debt, which continues to be a debt owed to the Commonwealth until it is repaid. A VET Student Loan will not be approved for students who do not meet the eligibility requirements. A 20% loan fee applies for full-fee-paying students. Figures are for 2026–27 and are examples only; this is general information, not financial advice. Sources: ATO repayment thresholds and rates, ATO indexation rates, DEWR: loan fee, ATO repayment calculator. SMR Learning Services Pty Ltd trading as TrainSmart Australia, RTO 51771.
