HECS-HELP is a loan scheme for eligible students enrolled in Commonwealth supported educational places to HELP pay their student contribution amounts. It doesn’t cover any additional study costs such as accommodation or textbooks.
WHAT IS HECS-HELP?
HECS-HELP is a loan from the Australian Government which pays for your course fees. The Australian Government will pay the amount of your loan or discount directly to your education institution. Then once you commence work and your income reaches a certain threshold which is currently $55,874 for the 2017/18 financial year, loan repayments are made through the tax system funded essentially by your salary. If you’d like to pay off your debt faster you can make voluntary repayments, regardless of how much you earn and at any stage through the year.
To qualify for HECS-HELP, you must meet the following conditions
- Be studying at a Commonwealth supported place
- Be an Australian citizen; or
- Be a New Zealand Special Category Visa holder who meets the long-term residency requirements; or
- Be a permanent humanitarian visa holder;
- Be enrolled in each unit at your university by the census date
- Meet the relevant HECS-HELP residency requirements; and
- Submit a valid request for HECS-HELP form by the census date to your university.
WHEN DO I HAVE TO REPAY MY HECS-HELP?
Your HECS-HELP debt repayments will take effect through your salary once your income exceeds the compulsory repayment threshold, even if you’re still studying or travelling.
The minimum Help Repayment Income (HRI) thresholds change each year. To make your loan repayments for 2017/18 the threshold starts at $55,874. When your income exceeds this threshold a compulsory repayment (starting at 4% of your income) takes effect as part of your tax assessment.
From 1 July 2018, a new lower income repayment threshold of $42,000 will be introduced with a repayment rate of 1%. The higher threshold limit will increase to a maximum 10% repayment rate for incomes over $119,882. If you expect your income may fall within these new repayment thresholds, please call our office to talk to our team about the implications and how to plan for this early.
HOW DO I REPAY MY HECS-HELP LOAN?
When you start a new job and are completing your Tax File Number Declaration you must take note of the question which notifies your employer that you have a HECS-HELP debt. Just tick the box on this TFN Declaration which you’ll need to fill out before you start work.
Your employer will then start setting aside additional tax from each pay to cover your estimated HECS-HELP debt based on your annual HRI. They will withhold this tax from income they pay to you. It is worth noting your employer will not factor in other income sources you may have, previous jobs or investments. So, if you’ve earned other income you may have to make a top-up payment once you lodge your tax return.
If you have further questions regarding the HECS-HELP system and how it may affect you, please contact our office to discuss this with our team.