The Higher Education Loan Program (HELP) has been a much-needed lifeline for students. If you want to go to university or undertake vocational training and you don’t have the cash up front for costly tuition fees, the Australian Government will loan you the money. Here’s everything you need to know about HELP debt.
What is a HELP debt?
If you’re studying right now, or considering studying, and you don’t plan to pay your full tuition upfront, then it’s likely you already have, or will need, a HELP debt. The Government offers this loan scheme to eligible students enrolled in Commonwealth supported places at universities and other education institutions. Essentially an interest-free loan, HELP debts are typically paid back after you complete your studies.
When do I need to repay my HELP debt?
You will need to start making compulsory repayments against your HELP debt as soon as your income exceeds the minimum repayment threshold. Thresholds are determined by the government and adjusted annually in line with average weekly earnings. From July 1 2018, the threshold is $51,956. To work out if your income exceeds the threshold, calculate your taxable income (the amount given on your tax return), as well as any reportable fringe benefits, net investment losses, reportable super contributions and exempt foreign income amounts.
Still studying? Completing an apprenticeship? Working overseas? It doesn’t affect your repayment obligations – if you earn over the threshold, you will be expected to make repayments to your HELP debt regardless of your situation.
How much will my repayments be?
The amount you pay each year is a percentage of your taxable income. This means the more you earn, the higher your repayments will be. It’s typically between 4% and 8%, but the Australian Taxation Office (ATO) will calculate the right amount and include it in your tax notice of assessment. Much like income tax, your HELP repayment is deducted from your pay by your employer – provided you let them know you have a debt to repay.
What do I need to do?
To make sure you’re complying with current legislation, and meeting your repayment obligations, you need to:
- Report your income (this includes income earned in Australia and overseas) in your annual tax return
- If you’re not working, you don’t need to report your income. However, you will need to complete a non-lodgement advice form
- Answer ‘yes’ to having a HELP debt on your tax file number declaration form when you start a new job, so your employer can make repayments on your behalf.
What happens to my HELP debt if I’m living overseas?
Your HELP debt repayment obligations don’t change if you move overseas. If you intend to live overseas for 183 days or more in any 12-month period, you must submit an overseas travel notification within 7 days of leaving Australia, as well as update your contact details, including your mobile, address and email. To complete your overseas travel notification, you’ll need your passport, as well as your expected or actual date of departure and your return date.
How can I manage my repayments from overseas?
You can lodge your return and make repayments in one of two ways: Online via the myGov website or through a registered Australian tax agent. Repayments can be made as a compulsory payment or as an overseas levy depending on how your income is made up.