What is HECS-HELP?
Australian citizens studying in Commonwealth supported places are eligible to apply for assistance to fund the student contribution amount for each unit in which they are enrolled. This assistance is in the form of a HECS-HELP loan. There is no real interest charged on the loan but the debt will be indexed each year in line with the Consumer Price Index. The adjustment is made on 1 June each year and applies to the any part of the debt that has been unpaid for 11 months or more. Eligible students can use a HECS-HELP loan for the whole amount of their student contribution.
I’ve finished studying – how much do I owe?
The Australian Taxation Office manages all HELP debts and this information can be viewed online through the myGov website once a myGov account has been created. You can also call the ATO to find out the details and you will need to quote your TFN to access the information.
Paying back my loan
Even if you are still studying, you will need to begin repaying a HELP debt as soon as your income, as reported through your income tax return, is above the compulsory repayment threshold. This amount is adjusted annually and for the 2016/17 financial year the amount is $54,869 and above. Repayments are made through the taxation system at a percentage of your annual income. The percentage increases as your income increases. For example someone earning between $54,869 and $61,119 will repay the loan at the rate of 4% per annum, while someone earning in excess of $101,900 will repay 8% of their annual income.
Voluntary repayments can be made at any time and for any amount, and before 31st December 2016 there is a bonus of 5% for doing so. This means that if you repay $500 by a voluntary payment, an additional credit of $25 is applied to your loan.
What if I can’t afford repayments?
You can apply to the ATO to have your payments deferred if you believe that your compulsory repayments would cause serious financial hardship. In making this application, you will need to substantiate your claim by providing a detailed statement of income and expenditure. It is possible to appeal should your application be unsuccessful.
Do I have to repay the loan and what happens to the debt if I die?
There are certain special circumstances that may result in cancellation of a debt for a particular unit if the unit has not been completed. You need to apply to have the special circumstances taken into account. In the case of death, any compulsory repayment relating to the period up to the person’s death must be paid from the estate, but the remainder of the accumulated debt is cancelled.
Are you interested in gaining a better understand of your HECS-HELP debt? Do you want to put a plan in place to make sure the loan is paid off as soon as possible? For your free initial consultation with one of our friendly advisers, call our office today, toll free on 1800 679 000 for our Rockhampton office and 1800 804 431 for our Melbourne office. One of our advisers would be delighted to assist you.
Sue Dunne has worked in financial services since 2007 and enjoys helping her clients to meet their objectives and dreams through improvement to their financial welfare. She has significant experience in small business management and is particularly interested in assisting women and young people with their financial progress.
Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s Individual objectives, financial situation or needs. Before acting on anything in this article you should consider if it is appropriate for you, having regard to your objectives, financial situation and needs.