The Federal Labor Government has recently announced plans to reduce all student debts by 20% if they are elected for a second term in the upcoming Federal Election (May 2025).
They have also proposed to raise the minimum salary threshold that individuals must earn before they are required to start repaying their loans.
What is HECS?
When students commence a university course, they may either pay their fees upfront or apply for a Higher Education Contribution Scheme Loan (HECS) via the Higher Education Loan Program (HELP).
Most students opt for HECS to allow for effective debt repayment over time.
When am I required to pay?
Students have the option to voluntarily repay their HELP debt at any time.
However, if a student’s annual income exceeds a specified ‘repayment threshold’ (currently set at $54,435) they must begin repaying their debt.
How much do I need to pay each year?
The annual compulsory repayment amount is calculated by the Australian Tax Office (ATO) when their tax return is lodged.
Additionally, if a student acquires a new job or changes their existing job, they must inform their employers about their HELP debt to enable appropriate amounts to be withheld from their regular pay and contributed towards compulsory repayment. These amounts are called Pay-As-You-Go (PAYG) deductions.
How could the proposed reforms affect me?
The proposed reforms intend to increase the current minimum repayment threshold from $54,435 from 2024-25 to $67,000 from 2025-26.
Significantly, HELP repayments will now only be calculated on the income above the $67,000 threshold rather than total annual income.
This transition may improve affordability and enhance student’s capacity to repay their loans, with the average debt holder projected to pay approximately $680 less per year.
Additionally, if enacted, all student loan debts will be reduced by 20%.
This would benefit anyone with the following loans:
- Any HELP loans (including HECS-HELP, FEE-HELP, STARTUP-HELP, SA-HELP or OS-HELP)
- VET Student loans
- Australian Apprenticeship Support Loans
- Student Start-up Loans
- Student Financial Supplement Scheme
If you or someone you know wish to discuss this issue further, then please do not hesitate to contact us on 02 8999 9809.