What Is a Student Start-up Loan?

A Student Start-up Loan is an interest-free loan delivered by Centrelink, a government agency that provides financial assistance and other services to the community. These loans can be a safe and affordable alternative to borrowing from private lenders.

Student Start-up Loans are $1,201 loans for higher education students who get Youth Allowance, Austudy or ABSTUDY Living Allowance. Students can use the amount borrowed for everyday expenses or for whatever purpose they choose.

These loans are a form of credit rather than an income-support payment, which means they’re tax-free and you don’t need to declare them as income on your tax return.

Eligible borrowers can get the loan up to twice per year, one for each of the two loan periods:

The first period runs from the 1st of January to the end of June, and
The second period runs from the 1st of July to the end of December.

The current loan amount for 2023 is $1,201 per loan period — a total annual value of $2,402.

Loan amounts are set annually and are reviewed on the 1st of January each year.

How and when you’ll receive payments

If approved for the loan, you’ll get the full $1,201 as a single payment.

If you’re starting a new course, the loan will be paid to you after your course starts.
If you’ve applied for future loan periods, you’ll get paid for each loan period you qualify for in the future when the loan period begins.

It’s important to point out that each loan payment is deposited at the same time as your regular fortnightly student payment, so you need to receive at least $1 of your regular student payment to receive the loan amount.

When you’ll need to repay the loan

You need to make compulsory repayments through the tax system once you start earning above the repayment income threshold. Your compulsory repayment amount isn’t calculated until your tax return is processed.

The repayment threshold for 2022-23 is $48,361.

You can also make voluntary repayments to reduce your debt.

Eligibility for the Student Start-up Loan

To be eligible for a Student Start-Up Loan, you need to receive certain Centrelink student support payments such as the Youth Allowance, Austudy or ABSTUDY Living Allowance.

In addition, you’ll need to meet the following study requirements:

Study load. You must be studying full-time.
Approved course. Your course must be a higher education course that leads to a degree or diploma, or a preparatory course before you start a degree or diploma. The course must be delivered by higher education institutions such as universities, some private colleges and some TAFE colleges. The course must also be listed on the National Register of Higher Education Providers. It can’t be a vocational education or training course.
Study rules. You need to be undertaking the course on the 35th day after the qualifying test day, which is the first day you meet all the eligibility rules for the payment. The qualifying test day depends on various factors but it could be your course start date, the date you applied for the loan, or the date your application was approved.

The purpose of the study rules is to ensure that funds are only given to students who are genuinely committed to completing their course. If you fail to meet these requirements you’ll have to pay the loan back sooner.

If you aren’t eligible for the Student Start-up Loan, consider other forms of financial support and assistance for students.

How to apply for the Student Start-up Loan

The Student Start-up Loan isn’t given automatically so you’ll need to apply for the loan through your online Centrelink account.

If you’re already receiving an eligible student payment and you have confirmed that your course is Student Start-up loan approved, you can follow the steps below to apply:

Log on to your myGov account to access your Centrelink online account
Click Payments and Claims
Click Update Circumstances
Select Apply for/Manage Student Start-up Loan — you’ll only see this option if you’re eligible
Choose the periods you wish to get the loan for
Read the Terms and Conditions
Accept the Declaration
Submit your application.

You can apply at any time after the course commences.

What to consider before borrowing

A Student Start-up Loan allows you to borrow money without interest — similar to the no-interest loans scheme (NILs) — but you should still think carefully before you apply.

You’ll probably have to repay it in the future, and when repayments kick in it will affect your take-home pay, which means your budget will get tighter and it might become more difficult to save money.
You’ll end up owing the government a sizable amount because the amount borrowed gets added to your HELP debt, While there isn’t any interest added to it, outstanding balances are indexed every year to keep up with inflation.
Your student debt could also reduce your future borrowing capacity. You might find it hard to get credit applications approved when you want to start a business, buy a home or even a car.

On the other hand, Student Start-up Loans have better terms than private personal loans, so if you do need to borrow money this type of loan is a cheaper option.