Alison McLean, a sheep farmer on a property north of Hay in south-western NSW, said the idea - endorsed by the architect of the HECS system, Bruce Chapman - would be a "game changer for rural Australia".

"Drought relief is not working and we need a new model to ensure that rural communities can survive the impacts of climate change by providing a mechanism to manage the peaks and troughs of farming using their own income," she said.

Ms McLean has written to Nationals senator for NSW Perin Davey in correspondence shared with Drought Minister David Littleproud and his cabinet colleague Bridget McKenzie.

She wants them to adopt a proposal to provide loans based on a percentage of a farm's turnover that would be repayable when the farm's gross revenue returned to normal.

While commercial loans were only available for farm business, these loans could be used for domestic expenses such as school fees.

The idea has been modelled by Professor Linda Botterill at the University of Canberra and the Australian National University's Bruce Chapman, who created the Higher Education Contribution Scheme for student loans in the 1980s.

Professor Chapman said the proposal made economic sense but did not serve politicians.

"The politics of drought is not only about helping farmers, the politics of drought is about showing the world including city dwellers ... that the government cares," he said.

"It does that by giving money away and having lots of announcements."

Mr Littleproud said successive governments had considered HECS-style loans but it was complex and there had not yet been "a viable proposal on how to set a universal repayment trigger-point".

He was also concerned the "more relaxed borrowing criteria for a HECS-style loan may encourage over-borrowing".

A farm might have little to no revenue during drought years because of crop failure or destocking of livestock, yet turn over millions of dollars when times are good. The academics say a loan is fairer than a grant or subsidy because the farmers are often asset-rich.

"Any mechanism that allows them to smooth their income over the climate cycle is going to help them manage the drought," Dr Botterill said. "What the farmers spend that money on would obviously be their personal choice."

Dr Botterill said farmers could use farm management deposits "to save in the good years for future bad years" and income-contingent loans would mirror this by also letting them "borrow from future good years".

The modelling was updated in 2017 with 20 years of revenue figures from Australian farms. The academics modelled loans of $50,000 and $100,000 at an interest rate of 4.5 per cent and repayment rates of 2 per cent of revenue and 5 per cent of revenue and found most farms would repay the loans within 10 years.

National Farmers Federation boss Tony Maher said he was "open to considering new, innovative ideas to reduce volatility and financial stress".

At the UNICEF drought summit on the central coast earlier this month, 88 young people aged 14 to 25 called for a HECS-style payment to let high school students defer school fees.

Some NSW private schools are already extending bursaries to more than half of their boarding students whose families are facing financial strain as a result of the drought. The federal government also provides Assistance for Isolated Children for 2600 children in NSW and 11,500 Australia wide.

Ms McLean said boarding school was the only viable option for some families, including her own because the nearest high school was 100 kilometres away, but she knew specific assistance for private school fees would be a "hard sell".