Understanding Your HECS-HELP Debt
What is a HECS Debt?
A HECS debt has two components – it is both a loan and a student discount.
For example, if you are an eligible student, the Australian Government (through the HECS-HELP scheme) will pay your course fees for you.
The Australian government pays the amount of the loan directly to your education institution.
Loan repayments are then made through the Australian taxation system when your income reaches a certain threshold (currently $46,620 for the 2020-21 financial year). It is possible to make voluntary repayments at any time regardless of income.
A HECS-HELP debt is incurred immediately following the elected ‘census’ date for any University course you have nominated to receive HELP assistance for.
Am I eligible for HECS-HELP?
To qualify for HECS-HELP, you must:
- 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;
- meet the relevant HECS-HELP residency requirements; 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 need to start repaying my HECS-HELP loan?
Repaying your HECS-HELP debt commences once your Help Repayment Income (HRI) is above the minimum repayment threshold for compulsory repayment. That is, once your taxable income reaches a certain level.
The HRI thresholds are adjusted each year.
The minimum HRI threshold to make a loan repayment for 2020-21 is $46,620. Where income exceeds this threshold, a compulsory repayment of at least 1% of your income is raised in your income tax assessment. The percentage increases as your income increases.
Rates for 2020-21 are as follows:
|Repayment income (RI)||Repayment rate|
|$46,620 – $53,826||1.0%|
|$53,827 – $57,055||2.0%|
|$57,056 – $60,479||2.5%|
|$60,480 – $64,108||3.0%|
|$64,109 – $67,954||3.5%|
|$67,955 – $72,031||4.0%|
|$72,032 – $76,354||4.5%|
|$76,355 – $80,935||5.0%|
|$80,936 – $85,792||5.5%|
|$85,793 – $90,939||6.0%|
|$90,940 – $96,396||6.5%|
|$96,397 – $102,179||7.0%|
|$102,180 – $108,309||7.5%|
|$108,310 – $114,707||8.0%|
|$114,708 – $121,698||8.5%|
|$121,699 – $128,999||9.0%|
|$129,000 – $136,739||9.5%|
|$136,740 and above||10%|
What is HELP Repayment Income (HRI)?
Your repayment income is different to your taxable income. It is calculated as:
- 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
How to check your HECS-HELP debt balance
There are two main ways to check your HECS-HELP debt balance:
- contact the ATO on 13 28 61, and provide them with your TFN. With this they are able to verify your personal details and tell you your HECS-HELP balance or
- view your HECS-HELP balance online via the myGov site. You will need to link your account to the ATO so they have all the details. From here, you view your balance online.
How to repay you HECS-HELP debt though the taxation system
When commencing a new job make sure you indicate to your employer that you have a HECS-HELP debt. This is done by ticking a box on the TAX DECLARATION FORM you will complete before starting work.
Your employer will withhold additional tax from each pay to cover your estimated HECS-HELP debt liability based on your annual HRI. The additional tax withheld by your employer should cover this repayment.
NOTE: Your employer only withholds the additional tax based on the income THEY pay to you. They won’t take into account other income – from second or previous jobs or investment for instance – so you may have to make a top-up payment once you lodge your tax return.
You are able to make voluntary repayments to your debt at any time to the ATO by BPAY and credit card. Visit the ATO or speak with your Tax agent for more information about how to make repayments and the best time to do so.
For further information on HECS and compulsory repayments visit the ATO here
Our team at Gerard Wilkes & Associates are here to help. If you have any questions regarding this article, or would like to discuss your taxation matters further, please contact us at https://www.wilkes.com.au/contact-us/ or call our office 07 5532 1733.