Your employer withholds study-loan amounts (shown as STSL on a payslip) only if it knows you have a loan and your pay for that period is over the threshold. If either isn't true, nothing comes out — but the ATO still assesses the repayment when you lodge. That gap is what turns into a surprise bill.
This is by far the most common cause. When you start a job you're asked whether you have a HELP, VET Student Loan, SFSS or other study loan. If that was answered "no", or the details never made it into payroll, your employer has no reason to withhold anything.
Fix: tell your payroll team you have a study loan and ask them to update your withholding. They can only change it going forward — amounts not withheld earlier in the year stay unwithheld, and you settle the difference at assessment.
Withholding is worked out per pay period, not per year. For 2026-27 the nil band runs to $69,528 of repayment income — roughly $1,337 a week. If a given fortnight or week falls below the equivalent figure in the ATO's tables, nothing is withheld for that pay.
This is why part-time, casual and irregular earners often see STSL appear on some payslips and not others.
If STSL didn't vanish but got noticeably smaller, this is probably why. HECS moved to a marginal repayment system on 1 July 2025, but payroll systems only adopted the matching withholding tables on 24 September 2025. Under the marginal system you only repay on income above the threshold, so the correct withholding is lower than it used to be.
The flip side: pays between 1 July and 23 September 2025 were withheld under the old, higher schedule. That's exactly why most people are owed a refund in their 2026 return.
Each employer withholds based only on what it pays you. Two jobs at $40,000 each may each sit under the threshold, so neither withholds a cent — but the ATO assesses you on the combined $80,000, which is over the threshold. The repayment is real; it just wasn't collected along the way.
If this is you, expect a bill rather than a refund. You can ask one employer to withhold extra to smooth it out.
Contractors and sole traders have no PAYG withholding, so no STSL is deducted at any point. The compulsory repayment is assessed with the rest of your tax return. If this is your situation, setting money aside through the year — or paying PAYG instalments — avoids the shock.
Nothing withheld doesn't mean nothing owed. Your compulsory repayment is calculated on your repayment income regardless of what payroll did. If little or nothing was withheld, that amount lands in your assessment as tax payable.
→ Check where you'll land — enter your income and the STSL actually withheld (enter $0 if none), and the estimator shows whether you're due a refund or facing a shortfall.