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Got a HECS / HELP debt? Voluntary payment discounts to end

January 2014

If you've been to university and have any outstanding HECS or HELP debt, then your opportunity to get a voluntary repayment bonus is coming to an end. 

What is the discount?
If you pay off your debt or make a voluntary payment of $500 or more, you will continue to receive the 5% discount until the legislation has passed. The 5% discount is on the amount you repay, not the total balance still owing. You will also not receive a bonus on repayment amounts that exceed the debts you've incurred.  

When is this changing?
The Federal Government introduced changes to the HECS/HELP program in the 2013/2014 Federal Budget that would remove the bonus by 1 January 2014. The legislation has yet to pass the Australian Senate, however until it does, anyone with an outstanding debt can continue to take advantage of the bonus. 

Why make a voluntary payment?
If you're in the higher income bracket, you generally make a contribution to your HECS or HELP debt at tax time. If you want to take advantage of the 5% discount before tax time, it's a good way to reduce the amount you have to pay overall

For example, let's say you have a total HECS or HELP debt of $15,000 and your current income is $180,000 per year with your 2013 Tax return due in May 2014.  Because you are over the threshold for repayment, you'll have to make a contribution toward your debt of 8%, which equals $14,400. If you make a voluntary payment to clear the debt while the bonus is still available, you can save $714. 

Of course, you need to have the cash available to clear the debt in full, so it's worth checking whether or not this is the right approach for you. It may still be worthwhile to pay a smaller amount toward the debt if you're not in a position to clear it entirely.

What's my repayment rate?
If you're in one of the higher brackets in the table below, the ATO will apply the following repayment rates to your debt:  

HELP HECS repayment income table 2013
*HRI = Taxable income plus any total net investment loss (which includes net rental losses), total reportable fringe benefits amounts, reportable super contributions and exempt foreign employment income.

How can I get more information?
Please contact us on 02 9957 4033 for more information about how a voluntary payment can reduce your HECS / HELP debt.        

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Last updated January 2014. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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