Yahoo Finance What the new HECS repayment changes mean for you
Many of Australia’s university graduates may end up paying back their debt sooner than thought with the HECS-HELP debt repayment thresholds set to drop from 1 July.
The new repayment threshold will be $45,881 before tax and follows another drop in the repayment threshold from $55,814 to $51,957 last year.
Those earning between $45,881-$52,973 will be required to pay 1 per cent of their salary, with the changes expected to deliver $345.7 million to the government until 2020-21.
The repayment required rises by 0.5 per cent - 1 per cent for every increase in income bracket, before becoming capped at 10 per cent of income for those making more than $131,989 annually.
It has been met with mixed reactions
“This is shameful by the ATO,” one person commented on Twitter.
“You could be working full time in a retail job and meet this HECS debt threshold. The government should be asking why degree holders aren’t meeting the threshold now lowering it.”
This is shameful by the ATO. You could be working full time in a retail job and meet this HECS debt threshold. The government should be asking why degree holders aren’t meeting the threshold now lowering it. #auspol pic.twitter.com/dWEBa0ygDq
— cindy boo hoo (@royeastmankodak) June 3, 2019
Others remarked on whether the lower threshold was fair.
“HECS-HELP repayment threshold 2017-2018 was $55,874. 2018-2019 it was $51,957. This year? $45,881. Rather than raise tax revenue from high income earners/corporations, our government continues to make life harder for the rest of us. Is this what ScoMo meant by a #fairgo?” PhD student, Sarah Gurr said.
HECS-HELP repayment threshold 2017-2018 was $55,874. 2018-2019 it was $51,957. This year? $45,881. Rather than raise tax revenue from high income earners/corporations, our government continues to make life harder for the rest of us. Is this what ScoMo meant by a #fairgo? #auspol pic.twitter.com/ljz8sWml7Y
— Sarah Gurr (@sarahkgurr) June 4, 2019
Economist Stephen Koukoulas suggested the decreased threshold was “one way to fund franking credit cash gifts”.
One way to fund franking credit cash gifts is to hammer students into fast tracking their already outrageously large HECS debts...
This is the economic policy of the Morrison government. What a disgrace https://t.co/T3v1zT98vN— Stephen Koukoulas (@TheKouk) June 5, 2019
However, according to a Grattan Institute government submission, the 1 per cent repayment is unlikely to cause “significant hardship”, given many of these earners may live in households where the total income is significantly higher.
A loophole which allowed graduates to avoid having to repay HECS debt by moving overseas was closed in 2016.
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