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Higher Education Loan Program (HELP) – Repaying your debt and changes to the system

Paul Money Partners > Blog > Higher Education Loan Program (HELP) – Repaying your debt and changes to the system

Many individuals who have gone through the Australian university system or another approved higher education provider will have opted to pay for their education via the HECS-HELP system. This system allows for your higher education to be repaid after your income reaches a certain level.

In August 2018, legislation was passed to reduce the threshold at which taxpayers are required to start paying back their higher education debt. In the 2018-19 financial year, individuals who earn greater than $51,957 are required to start paying back their debt. From 1 July 2019 (the 2019-20 financial year), individuals who earn greater than $45,881 will be required to start paying. Below is a table of the repayment rates for the current year, 2018-19.  The amount of debt to be repaid is determined by multiplying the applicable repayment rate by your income.

In 2019-20 there will be a greater number of thresholds/repayment rates, increasing from 11 to 19. It is also important to note that the maximum repayment rate has increased from 8% to 10% for the highest bracket of income earners.

If you earn more than these thresholds it is important that you inform your employer(s) that you have a HECS-HELP debt so that the employer can withhold enough tax from your wage to cover this debt. Otherwise, you will likely receive a nasty surprise when you come to lodge your tax return at the end of the year, in the form of a tax liability.

<Author: Sean Money>