Higher education plays a massive role in the lives of many Australians. In order to promote and encourage tertiary education, the Australian government provide financial assistance for fees and expenses at universities, other higher education providers and approved vocational education training (VET) providers.
Initially this was covered by the Higher Education Contribution Scheme (HECS); however as of 1 January 2005 this was superseded by the Higher education Loan Programme (HELP) – although some people continue to use HECS today.
In order to be eligible for HECS or HELP, the applicant must:
- Be studying in a Commonwealth supported place;
- Be an Australian citizen or permanent humanitarian visa holder;
- Enrol with a provider in each unit, by the census date;
- Meet the residency requirements (study in campus and study within Australia).
Paying back the HELP loans
The rate of repayment of HELP loans is dependent on your annual gross income. As your gross income increases above $54,126 (below this there are no repayments), so does your annual repayment amount (see table below).
Currently borrowers that pay their contribution upfront are eligible for a 10% discount; however this is to be removed as of 1 January 2016.
The repayment rates for 2015/2016 are as follow:
| Repayment income | Repayment rate |
| $54,126 or less | Nil |
| $54,126 – $60,292 | 4.0% |
| $60,293 – $66,456 | 4.5% |
| $66,457 – $69,949 | 5.0% |
| $69,950 – $75,190 | 5.5% |
| $75,191 – $81,432 | 6.0% |
| $81,433 – $85,718 | 6.5% |
| $85,719 – $94,331 | 7.0% |
| $94,332 – $100,519 | 7.5% |
| $100,520 and above | 8.0% |
If your income meets the minimum threshold, your repayment will be calculated and automatically added to your tax.
The impact of HELP loans on other loan applications
Although you might think that as it is linked to your gross income, your HELP loan would not affect applications for other loans, it can.
A good example of this is if you were to apply for a home loan. A home loan application is based on your credit history (defaults etc), account conduct (including having overdrawn accounts) and your borrowing capacity. Borrowing capacity is namely influenced by the balance of your income against any liabilities, in which your HELP loan would be included. As you would expect all current debts would be included in a new credit application.
It is important to note however that HELP debt is unlikely to bar an applicant from access to additional credit, assuming their income is sufficient to service the new loan.
If you have any questions about HELP loans or would like to book in for a tax return, feel free to email our team at info@gpla.com.au or call on 07 5444 1022
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