How can you check your HECS repayment debt? You should consider whether the information applies to you and your individual needs. Your debt will continue to be indexed every year until the entire debt is repaid. The Department of Education and Training will update the HELP booklets and the Commonwealth Assistance Form for Commonwealth supported places and HECS HELP. Below is a flow diagram on some of the factors you can consider when deciding whether to make voluntary HECS repayments. ... Making voluntary contributions will definitely help pay down the loan faster. As a blog, it should not be taken as a substitute for professional advice from a trusted financial adviser. Voluntary repayment are in addition to the compulsory repayments make through your tax return. From 1 January 2017, the government will remove the 5% voluntary repayment bonus for HECS/HELP loans. On checking my ATO online account I can see that $805 has been credited to my HECS debt as my “compulsory repayment credit”. You can find more information via the ATO website. The HECS-HELP program allows eligible Commonwealth supported students to defer their student contribution and repay it later through the taxation system. You may still have to make a compulsory repayment or pay an overseas levy if, after making your voluntary repayment: you still have a debt your repayment income is above the minimum repayment threshold. If you direct this additional income to your savings account alongside your regular $100 per week, you’ll have your $10,000 savings balance back within 18 months AND be HECS debt free. Commonwealth supported students who are eligible for HECS-HELP and elect to fully pay, or part pay $500 or more of, their student contribution amount upfront to their higher education provider currently receive a discount of 10 per cent. He is currently a tax consultant at EY. This 5% bonus currently applies to voluntary HECS/HELP repayments of $500 or more. If you still have debt after making the voluntary payment, you may still be required to make a compulsory repayment. The discount for voluntary repayments of a pre-2005 HECS debt was reduced from 15% to 10% from 1 January 2005. If you never pay off your HECS, this interest amount will continue to compound. Make a repayment arrangement with the ATO. What are the compulsory HECS repayment rates? Disclaimer: This blog is not meant to be tax advice but rather general and educational in nature. How paying off HECS-HELP has become even less attractive ... Financial advisers warn low inflation combined with the government's move to strip incentives for voluntary repayment … How does the compulsory HECS repayment actually work? The compulsory repayment threshold for the 2019-20 income year was $45,881. Your payslip may not necessarily show the amount of tax allocated to the HECS repayment amount. The minimum HRI threshold to make a loan repayment for 2019-20 is $45,881. Many people would say that HECS is interest-free. If you are having issues paying off debt, you should create a budget. HECS is a loan, and the timing and manner of a voluntary repayment is a financial decision based on your circumstances. Can I pay off my HECS / HELP debt sooner? If the payment amounts you can reasonably afford are quite low, you’ll need to go through the ATO’s hardship department to arrange payment.Refer to Tax debts for the process. This process is similar to other forms of debt such as credit cards, just at a lower rate. HECS-HELP loan (we will simply refer it to HECS) is an initiative by the government where students that meet the requirements are able to defer their higher education fees. Then, you would be better able to meet your other obligations like rent and utilities if times become tough. If you do earn over the repayment threshold you will have to start paying your HECS-HELP loan in the form of compulsory repayments or an overseas levy. The compulsory repayment threshold is adjusted each year. Why was this amount refunded to me instead of credited to my debt? In the past, people could get a discount on voluntary student debt repayments — which made that option more attractive — but the discount was removed from 2017. "The current repayment rate is 4 per cent of taxable income on this lower threshold, and rises by income bands to 8 per cent above $103,766 per annum, and the employer withholds this repayment alongside withholding tax. Taxable income for the income year (your assessable income subtract deductions); Any total reportable fringe benefits amounts; Any exempt foreign employment income from the current income year. A Personal Finance Blog for Young Aussies. All the information posted on this website is of a general nature and for educational purposes only. 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