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Your guide to understanding HECS-HELP

Mark Chapman
·4-min read
Group of students working in group & laughing
How will you handle the student loan that paid for your university education? (Image: Getty)

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.

The Australian Government will pay the amount of your course fees directly to your education institution. Once your income reaches a certain threshold (currently $45,881 for the 2019-20 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.

A HECS-HELP debt kicks off immediately after the elected 'census' date for any university course you’ve nominated to receive HELP assistance for.

Am I eligible for HECS-HELP?

To qualify for HECS-HELP, you have to meet the following criteria:

  • Be studying in 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; and

  • Submit a valid request for Commonwealth support and HECS-HELP form by the census date (or earlier administrative date) to your university.

When do I have to repay my HECS-HELP?

Your HECS-HELP debt repayments will take effect through your taxes once your income passes 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 2019-20, the threshold is set at $45,881. Where income exceeds this threshold, a compulsory repayment of at least 1% of your income takes effect as part of your tax assessment. The percentage increases in tandem with your income.

Rates for 2019-20 are as follows:

2019-2020 Repayment threshold

Repayment % rate

Below $45,881

Nil

$45,881 - $52,973

1.0%

$52,974 - $56,151

2.0%

$56,152 - $59,521

2.5%

$59,522 - $63,092

3.0%

$63,093 - $66,877

3.5%

$66,878 - $70,890

4.0%

$70,891 - $75,144

4.5%

$75,145 - $79,652

5.0%

$79,653 - $84,432

5.5%

$84,433 - $89,498

6.0%

$89,499 - $94,868

6.5%

$94,869 - $100,560

7.0%

$100,561 - $106,593

7.5%

$106,594 - $112,989

8.0%

$112,990 - $119,769

8.5%

$119,770 - $126,955

9.0%

$126,956 - $134,572

9.5%

$134,573 and above

10.0%

What is the HECS-HELP repayment income threshold?

Your HECS-HELP repayment income (HRI) differs from your taxable income. Calculate it like this:

  • Your taxable income for an income year, plus

  • Your total net investment losses, plus

  • Any total reportable fringe benefit amounts shown on your PAYG payment summary; plus

  • Reportable super contributions; and

  • Any exempt foreign employment income from the current income year.

Repaying your HECS-HELP loan

Compulsory HECS-HELP Repayments

When you start a new job, make a note to let your employer know you’ve got a HECS-HELP debt. Just tick the box on your TAX DECLARATION FORM which you’ll need to fill out before you get to work.

Your employer will set aside additional tax from each pay to cover your estimated HECS-HELP debt based on your annual HRI. Keep in mind, your employer will withhold the additional tax based on the income they pay to you. They won’t factor in other income sources, previous jobs or investments. So, if you’ve got any of these sources of income, you’ll have to make a top-up payment once you lodge your tax return.

Voluntary HECS-HELP repayments

If you like to stay ahead, you can make voluntary repayments anytime to the ATO by BPAY or credit card.

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