Higher Education Loan Program or HELP is a loan program to help eligible students enrolled in Commonwealth supported places to pay their student contribution amounts. Before , this was know as "HECS". HECS-HELP debt has to be repaid through the taxation system once your repayment income is above the compulsory repayment threshold, even if you are still studying.
Last year, the indexation rate was 1. The second reason HELP debt is better than regular debt is that there's no deadline to repay it. While you can't avoid paying it once you earn enough money, you're not forced to pay off the balance in a rush.
The tax office will charge you interest, and they'll want to collect the debt very quickly. The amount you have to repay is calculated as a portion of your income before tax. Here's the repayment rates for the year to June 30, The thresholds change each year, so make sure you check the ATO website for the most up-to-date information. Also, keep in mind that if you cross the minimum repayment threshold while studying, you still have to make repayments.
If you have a job, you might be wondering whether you should make extra repayments to your student debt. There's no simple answer and we can't give out financial advice. But we can work through it. Melissa Browne, a financial adviser and accountant who has written books on personal finance, separates debt into three categories: good, okay and bad.
In the past, people could get a discount on voluntary student debt repayments — which made that option more attractive — but the discount was removed from If you are debt free, investing or saving can be a good option, Ms Browne adds. Many savings accounts pay interest much higher than the HELP indexation rate, so you could end up ahead by investing in an ETF exchange traded fund , direct shares, property, a business or even popping the money into an online high-interest savings account instead.
If you're thinking about investing, be conscious of any risks and think about your investment timeframe before jumping in. If you're curious, you might like to start by listening to this short introduction from the Pineapple Project. There's one more thing we should mention. If, like this audience member, you're saving for a house, keep in mind that having student debt can affect how much you can borrow.
This is one reason why some people choose to pay off their HELP debt earlier. Finally, if your student debt plays on your mind from time to time, just be glad we don't live in the United States, where student debt can be far more expensive and stressful.
Remember — if you are not sure if you can claim an expense, keep the receipt and we will ensure that we claim all allowable deductions and rebates for you whilst preparing your tax return. Every year we help thousands of Australians achieve a better taxation result. For your nearest office call 13 23 Phone Appointments available. Find an office to book your appointment. The Australian government pays the amount of the loan directly to your education institution.
The RI thresholds are adjusted each year. Your repayment income is different to your taxable income. It is calculated as: your taxable income for an income year, plus your total net investment losses, plus any total reportable fringe benefit amounts shown on your Income Statement; plus reportable super contributions; and any exempt foreign employment income from the current income year How to check your HECS-HELP debt balance There are two main ways to check your HECS-HELP debt balance: contact the ATO on 13 28 61, and provide them with your TFN.
You will need to link your account to the ATO so they have all the details. From here, you view your balance online. Tax tips for repaying your HELP debt Keeping receipts and claiming deductions for everything you're entitled to can reduce your RI and minimise your compulsory annual repayment amount.
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