HECS-HELP Loans

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HECS-HELP Loans

Being constantly exposed to American pop culture, it’s easy to assume that “going to college” is a luxury that most people struggle to afford. Fortunately for us, Australian citizens don’t actually have to pay anything up front to go to uni. Under our system, all university students are entitled to the HECS-HELP scheme, which is partly a subsidy and partly a loan, and, just to repeat, this means we pay nothing up front for uni. Although your parents probably got to go to uni for free, we’re still pretty damn lucky by international standards to be entitled to this loan system. 

Am I Eligible?

You almost certainly are – so long as you’re an Australian or New Zealand citizen, or the holder of a permanent residency visa and you get accepted into a public university. Too easy.

How does it work?

When you apply for a course in any public university, you’re applying for a Commonwealth Supported place, which means the government is partially subsidising your degree, while also providing you with a loan. (There are also certain “priority” degrees, such as nursing and teaching, for which you can get a Commonwealth Supported place at a private university.) The best part is that you don’t have to pay back any of your HECS-HELP debt until you’re earning over the threshold, which is currently an annual salary of $54,869 for the 2016-2017 income year.

Repaying the debt

We often hear horror stories about crippling student debt (mostly from America, to be fair), where students spend their whole lives working their asses off and can only seem to chip away at the interest. Fortunately for us Aussies, we don’t pay any interest on our student debts (however, your debt could alter slightly over time to reflect changes in inflation). And we don’t start paying off our student debt until we earn over the threshold, which, as mentioned, is currently $54,869 per year.

If your yearly taxable income is below that amount, you don’t pay any money back - at least not until you start earning a proper salary. So in theory, if you never make the big bucks, you never have to pay your student debt back, which certainly takes the pressure off if you’re only half sure about what you want to study.

I once heard a rumour that if you die still owing student debts then your family has to pay them back for you. While the thought is more than a little morbid, it’s also untrue – in this case your accumulated HELP debt is cancelled.

Having said that, the more money you earn, the more of your HECS-HELP debt you have to pay back (which is probably fair enough).

If you’re still a little confused about it all, here’s an example:

You study a Bachelor of Arts and graduate with a head full of complex theories, a few good hangovers, the best memories and (ahem… cough) an $18,000 HECS-HELP debt. You soon get a rad job as a content writer for a hip new website and earn $60,000 a year in your first year out of uni.

In this case you’d be required to pay 4 per cent of your taxable income off your HECS-HELP debt, which is $2,400 a year.

The conclusion?

Don’t be afraid or intimidated by student debt. HECS-HELP is pretty damn fair and well regulated, a system designed to encourage people to study, not fear it.

This information is intended to be general in nature only and might not apply to your personal circumstances. When in doubt, always seek professional guidance.
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