Understanding your HECS-HELP debt
HECS-HELP is a loan scheme for eligible students enrolled in Commonwealth supported places to pay their student contribution amounts. It doesn’t extend to additional study costs such as accommodation or textbooks. To help you better understand how HECS-HELP affects you and your taxes, we’ve put together a comprehensive guide to getting to know HECS-HELP.
WHAT IS HECS-HELP?
HECS-HELP is both a loan and a student discount. Let’s say you’re an eligible student – the Australian Government (through the HECS-HELP scheme) will pay your course fees for you. If you pay your course fees upfront ($500 or more), you can use the scheme to receive a discount.
The Australian Government will pay the amount of your loan or discount directly to your education institution. Once your income reaches a certain threshold (currently $51,957 for the 2018-2019 financial year), loan repayments are then made through the tax system. If you wanted to pay off your debt faster, you can make voluntary repayments, regardless of how much you earn.
WHEN DO I HAVE TO REPAY MY HECS-HELP?
Your HECS-HELP debt repayments will take effect through your taxes once your income surpasses the compulsory repayment threshold, even if you’re still studying.
The minimum Help Repayment Income (HRI) thresholds change each year. To make your loan repayments for 2018-19, the threshold is set at $51,957. Where income exceeds this threshold, a compulsory repayment of at least 2% of your income takes effect as part of your tax assessment. The percentage increases in tandem with your income.
| Repayment income (RI*) | Repayment rate |
|---|---|
| Below $51,957 | Nil |
| $51,957 – $57,729 | 2.0% |
| $64,307 – $70,881 | 4.0% |
| $64,307 – $70,881 | 4.5% |
| $70,882 – $74,607 | 5.0% |
| $74,608 – $80,197 | 5.5% |
| $80,198 – $86,855 | 6.0% |
| $86,856 – $91,425 | 6.5% |
| $91,426 – $100,613 | 7.0% |
| $100,614 – $107,213 | 7.5% |
| $107,214 and above | 8.0% |