Menu
 

Got a HELP debt? The impending changes to speed up your repayments

September 2018


The Government is speeding up the payment cycle for students with outstanding debt that, to them, appear to be 'eternal students' who study but never earn an income.

New lifetime caps on Higher Education Loan Program (HELP) debt will prevent people from constantly going to University without converting that study into a viable career with new loan limits coming into force from 1 January 2019:

  • $150,000 – for students undertaking medicine, dentistry and veterinary science courses (as defined in HESA). The new limit is more than the intended FEE-HELP limit for 2019 of $130,552.
  • $104,440 – for other students

The new lifetime limits only apply to new loans. Existing debt is not taken into account.

New CPI indexed repayment thresholds also come into force

From 1 July 2019, the level of income at which HELP debt is repaid reduces from the current threshold of $51,957 to $45,000. Additionally, the maximum repayment rate that applies will increase to force higher income earners to pay back the debt sooner.

Those on incomes of $131,989 plus, will need to pay back the debt at a rate of 10% per annum (the current limit is capped at 8% once income reaches $107,214).

And think about where your income comes from

If you think negatively geared rental properties or other investments can offset the repayment rate you face, think again.

'Repayment income' is taxable income plus any net investment losses, reportable fringe benefits, reportable super contributions and exempt foreign employment income (that is, repayment income is global. Any employment income you earn overseas is included in the repayment income definition).

Minimum 'repayment income'

Repayment

Up to and

including $44,999

 

0%

$45,000 - $51,956

1%

$51,957 - $55,073

2%

$55,074 - $58,378

2.5%

$58,379 - $61,881

3%

$61,882 - $65,594

3.5%

$65,595 - $69,529

4%

$69,530 - $73,701

4.5%

$73,702 - $78,123

5%

$78,124- $82,811

5.5%

$82,812 - $87,779

6%

$87,780 - $93,046

6.5%

$93,047 - $98,629

7%

$98,630 - $104,547

7.5%

$104,548 - $110,820

8%

$110,821 - $117,469

8.5%

$117,470 - $124,517

9%

$124,518 - $131,988

9.5%

$131,989 +

10%

Got a HELP debt?

To understand how the new rules impact your tax, please contact us on 02 9957 4033.

Follow Bates Cosgrave on Linkedin, Facebook or Twitter


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.

Share this


Get Small Business News each month


ChineseLanguage Select

Archive
20192018201720162015

Sign up to our monthly client bulletin.