For a large number of Australian high school graduates, university is the next step in their progression to a professional career. It can also be the stepping stone for adults looking for a career change or advancement in their field. In Australia, universities are privately run and courses usually come with a hefty price tag. One way the government is supporting higher education pathways is by offering eligible students an interest-free loan to pay the fees upfront, with the debt being payable once they have gained employment and started earning a certain amount.
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The following table displays a snapshot of savings accounts on Canstar’s database with links to providers’ websites, sorted by the total interest rate (highest to lowest). The results and Star Ratings shown are based on a regular saver in NSW with $5,000 in current savings.
What is HECS and HELP and who is eligible?
The HELP (Higher Education Loan Program) has four different loan schemes that provide financial support to students, including HECS-HELP (student contributions), FEE-HELP (tuition fees), overseas study expenses (OS-HELP) and student service and amenities fees (SA-HELP) according to the Australian Government. HELP replaced the Higher Education Contribution Scheme (known as ‘HECS’). HECS-HELP loans are available to eligible students who attend university or an approved higher education program to cover the course fees. The HECS-HELP loan limit in 2021 is $108,232, or $155,448 if you study dentistry, medicine, veterinary science or eligible aviation courses.
To be eligible for a HECS-HELP loan, you must:
- be enrolled in a Commonwealth supported place (CSP)
- be an Australian citizen, or be a New Zealand Special Category Visa (SCV) permanent humanitarian visa holder, and meet residency requirements (including studying at least part of the course in Australia)
- complete the Request for a Commonwealth supported place and a HECS-HELP loan form to your university or course provider before the census date
How do you pay HECS-HELP debt?
Once you are enrolled, your course fees will be added to your student debt after the census date, which is often a few weeks into the semester. This means even if you do not finish the semester, you will still carry the debt. There may also be extra academic and financial penalties that apply. Once you begin earning an income over a certain threshold, you are required to repay a percentage of your salary towards your debt. This is taken automatically from your pay if you are an employee and may also be payable after you complete your tax return, depending on your compulsory repayment rate. You can also choose to make voluntary repayments on top of your compulsory repayments.
How do I apply for HECS-HELP?
If you intend to enrol in an eligible course, you can apply for a HECS-HELP loan by submitting the Request for Commonwealth support and HECS-HELP form to your course provider. To do this, you will need:
- your tax file number, or a certificate of application for a tax file number
- your Unique Student Identifier (USI)
What are the HECS-HELP fees?
HECS-HELP does not carry any interest. However, the government does apply indexation to remaining debt on 1 June every year. This means your debt will be subject to inflation, so your debt will increase in line with the cost of living. The indexation varies depending on the year. In 2021 indexation was 0.6%, but in 2020 it was 1.8%. There is a 10% upfront discount available for students who make an upfront payment of $500 or more, or equal to 90% of the student contribution amount.
How much HECS-HELP do I pay?
Your HECS-HELP repayments depend on your income. As a general rule, the more you earn, the higher your repayments will be. The Australian Taxation Office (ATO) will calculate your total income for the year when you do your tax return and will tell you how much your compulsory repayment will be.
HECS-HELP loan repayment income thresholds and rates
|Repayment income||Repayment rate|
|$47,014 – $54,282||1.0%|
|$54,283 – $57,638||2.0%|
|$57,539 – $60,991||2.5%|
|$60,992 – $64,651||3.0%|
|$64,652 – $68,529||3.5%|
|$68,530 – $72,641||4.0%|
|$72,642 – $77,001||4.5%|
|$77,002 – $81,620||5.0%|
|$81,621 – $86,518||5.5%|
|$86,519 – $91,709||6.0%|
|$91,710 – $97,212||6.5%|
|$97,213 – $103,045||7.0%|
|$103,046 – $109,227||7.5%|
|$109,228 – $115,781||8.0%|
|$115,782 – $122,728||8.5%|
|$122,729 – $130,092||9.0%|
|$130,093 – $137,897||9.5%|
|$137,898 and above||10.0%|
Source: Australian Taxation Office (ATO), accessed 16 September 2021
The repayment income includes 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.
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