A HECS debt written off will produce several effects. In this article, we will discuss these effects and other necessary information in relation to HECS debts in Australia.
First things first, what is HECS and why are there HECS debts? HECS is the Higher Education Contribution Scheme in Australia. It is part of the country’s higher education system which functions as a tertiary financing for students who face financial barriers.
To simply put it, the organisation is a government loan system that assists students in paying their tuition fees. Its purpose is to provide better access to higher education to students by allowing them to postpone their payment until they can stand on their own financially.
But what happens when your HECS debt gets written off and what does to ‘write off’ mean? Let’s find out.
HECS Debt Written Off: The Basics
HECS is also known as HECS-HELP (Higher Education Loan Program). This program financially assists students to pay for the following school expenses:
- Student contributions (HECS-HELP)
- Tuition fees (FEE-HELP)
- Overseas study expenses (OS-HELP)
- Student service and amenities fees (SA-HELP).
The loan limit for 2024 are the following:
- AUD 121,844 – most students
- AUD 174, 998 – for students studying medicine, dentistry, or veterinary courses, and eligible aviation courses.
Basically, this is a ‘study now, pay later’ scheme by the government for higher education students. This way, students who are eligible can apply for a loan (for example Australian Apprenticeship Support Loans) and gain secure and rewarding careers without the stress of paying it off immediately.
Eligibility Requirements
To be eligible, you must have the following requirements:
- You are studying in a Commonwealth supported place (CSP).
- Meet the citizenship and residency requirements.
- Submit the request for Commonwealth assistance form to your provider by the census date.
- You must have available HELP balance.
- You must have sufficient Student Learning Entitlement available.
- You are a genuine student and you are academically suitable for your unit(s) of study.
- You must not undertake more than two years’ worth of higher education study in 12 months unless your provider has approved you to take on more.
To check if you are eligible, you can use this Eligibility Tool by Student Assist.
Here’s an overview of how HECS-HELP works:
- The applicant must check if they are eligible for a Commonwealth Supported Place (CSP).
- Check if they offer your course as a CSP on the provider website or at Course Seeker.
- Check your available HELP balance at myHELPbalance.
- Apply for your course and CSP with your provider.
- Accept CSP and apply for HECS-HELP loan with your provider on or before the census date.
- Start repaying your HELP debt when you begin earning above the threshold.
What Happens if Government Gets HECS Debt Written Off?
But what happens after a HECS debt written off? If the government gets HECS debt written off, there are two effects:
A. Reduction of Indexation Rate
First, in a Financial Review article by Julia Hare, the Australian government is reducing the indexation rate for HECS debt, which will result in a $3 billion reduction for more than 3 million graduates.
This change is effective from last year (2023), and they will index all future HECS debts to the lower of the consumer price index or the wage price index. This change is expected to help students and graduates financially, and will also help to ensure that the HECS system is sustainable in the long term.
B. Increase of Repayment Threshold
Second, the government will increase repayment thresholds. This means that the government adjusts the threshold to make it easier for Australian graduates to manage their student debts.
According to Student Assist, they will calculate your repayment amount on the basis of your salary. So, the higher you earn, the higher your compulsory payment will be. You may check out the matrix table of the 2024-2025 repayment threshold and repayment % rate here.
For the most accurate and up-to-date information on the Australian government policies regarding HECS debt, you can check official government sources or consult with a lawyer with experience in finance and tax.
C. Loan Deadlines
In relation to repayment and indexation rate reduction, it is also important to know about loan deadlines. When you have a HECS loan, you need to take note of two important dates: (1) the census date; and (2) the administrative date.
The census date is the final day when you can:
- make an upfront payment,
- apply for a Higher Education Loan Program (HELP) loan,
- accept an offer in a Commonwealth supported place (CSP) or
- formally withdraw from your study without getting a HELP debt or losing an upfront payment.
On the other hand, an administrative date is an ‘extra deadline’ set before the census date. This deadline is for submitting forms or making upfront payments. This is akin to a payment due date, an invoice due date, or a fees payment date.
How Can a Lawyer Help?
Was your HECS debt written off and you don’t know what the next step is? Seek legal assistance from a lawyer immediately. If you’re in a more complicated situation such as those relating to Australian tax law, legal advice can be invaluable.
Before meeting with a legal professional, you must prepare relevant documents and questions and information that you want to clarify. This way, your consultation will be more enlightening and productive.
Our lawyers at JB Solicitors can assist you in complicated HECS debt situations in Australia:
- Tax implications of HECS debt situations,
- Financial hardship or disability,
- Student debt calculation errors,
- Australian Taxation Office (ATO) disputes, or
- Indexation credit issues.
We can also provide the following legal services:
- Negotiation with debt collection agencies,
- Education loan, vet student loans, Australian apprenticeship support loan contract review,
- Court representation, if necessary,
- Indexation issues, and
- Dispute resolution for calculating average debt, compulsory repayment, and other financial issues
Would you like to know more about specific HECS debt issues or explore other options for managing your debt? You can contact the ATO directly for inquiries. However, if you feel that your situation requires legal intervention, consult a lawyer immediately.
Schedule a consultation with one of our solicitors through this link.
