Repayment of Financial Supplement loan (FSL) prior to transfer to the Australian Taxation Office (ATO) 102-15010010

FSL was a voluntary loan paid under the Student Financial Supplement Scheme (SFSS) that gave eligible tertiary students the option of borrowing money to help cover their expenses while they studied.

FSL was payable only to tertiary students who were in receipt of an appropriate benefit such as ABSTUDY (Living Allowance), Austudy, Pensioner Education Supplement (PES) or Youth Allowance (YA), and for students eligible as a Category 2 student.

The funds for FSL were provided by the Commonwealth Bank of Australia (CBA). When the student applied for a FSL, at any branch of the CBA, the student entered into a loan contract with the CBA. The contract period commenced on the day the CBA accepted the FSL loan application and ended on 1 June of the fifth year after the year the loan was taken out.

All repayments made during the contract period attracted an early repayment bonus. To repay a student loan in full within the contract period the student only had to pay 85 per cent of the total amount outstanding. This included any annual Consumer Price Index (CPI) adjustments. Students are liable for the full amount received from the CBA. Interest on the loan was paid by the government, but the student is liable for the CPI that is applied to the loan on 1 June each year.

All loans were administered by Services Australia until the end of the contract period. At the end of the contract period, the outstanding loan was transferred to the Australian Taxation Office (ATO). The loan then became a debt to the Commonwealth and is repayable through the taxation system. The final balance on all outstanding loans will show as zero on the agencies system. This does not mean that the loan has been zeroed off, just that the balance has now been transferred to the ATO for recovery through the taxation system. CPI adjustments continue to be applied every year (on 1 July) while there is an outstanding FSL balance with the ATO.

Each loan payment made to the student increased the loan balance at the CBA. A record is held on Services Australia’s system of all transactions made on the CBA loan account.

Note: in December 2005 the CBA issued statements to all customers advising that the loans had been repaid and were closed. As Services Australia had already bought back the loan, any repayments made to the CBA in December 2005 were returned by the CBA to the customer.

Provisions did not exist for customers to have deductions made from a Services Australia entitlement to make repayments toward a FSL.

Note: any voluntary repayments made during the contract period were paid directly to the CBA.

Provisions did not exist for customers to have their employer deduct part of their wages and forward the deduction to the CBA, Australia Post or Services Australia, with regard to an outstanding FSL balance.

If a customer does not agree with an FSL decision, they can request an explanation or apply for a formal review of the decision.

If a customer provides proof that the information held by Services Australia regarding their loan is incorrect, they should provide this evidence to Services Australia for investigation. Service Officers who receive this information should forward the details to the Student Programs Team.