This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/australia-news/2018/jun/28/student-debt-how-the-governments-hecs-changes-will-affect-you
The article has changed 4 times. There is an RSS feed of changes available.
Version 2 | Version 3 |
---|---|
Student debt: how the government's Hecs changes will affect you | Student debt: how the government's Hecs changes will affect you |
(21 days later) | |
From Sunday, thousands of students and graduates across the country will have to start paying off their debts earlier than expected. | From Sunday, thousands of students and graduates across the country will have to start paying off their debts earlier than expected. |
In the coming financial year, which starts on 1 July, anybody earning $52,000 or more a year will have to start paying off their student debts, which for most domestic and undergraduate students is known as the Higher Education Contribution Scheme (Hecs). | In the coming financial year, which starts on 1 July, anybody earning $52,000 or more a year will have to start paying off their student debts, which for most domestic and undergraduate students is known as the Higher Education Contribution Scheme (Hecs). |
And that’s just the first stage of changes because the government announced plans to lower the repayment threshold further to $44,999 in the budget. The bill locking in that change was expected to pass the Senate this week but has now been delayed until parliament resumes in August. | And that’s just the first stage of changes because the government announced plans to lower the repayment threshold further to $44,999 in the budget. The bill locking in that change was expected to pass the Senate this week but has now been delayed until parliament resumes in August. |
Given the bill has not passed before the start of the 2018-19 financial year, the full reduction in the threshold will likely not apply until 1 July 2019. | Given the bill has not passed before the start of the 2018-19 financial year, the full reduction in the threshold will likely not apply until 1 July 2019. |
When do I have to pay it back? | When do I have to pay it back? |
Under changes made in 2016, from 1 July 2018 people earning more than $51,956 will have to start paying back student debts. | Under changes made in 2016, from 1 July 2018 people earning more than $51,956 will have to start paying back student debts. |
If and when the Coalition bill passes, you will have to start paying your debt once you earn $45,000 or more a year, with a likely start date of 1 July 2019. | If and when the Coalition bill passes, you will have to start paying your debt once you earn $45,000 or more a year, with a likely start date of 1 July 2019. |
For the 2017-18 tax return, you will only pay your debt if you have a taxable income of more than $55,874. | For the 2017-18 tax return, you will only pay your debt if you have a taxable income of more than $55,874. |
Importantly, it’s not just graduates who are affected – you have to start paying your student debt as soon as you hit the income threshold, even if you are still studying. | Importantly, it’s not just graduates who are affected – you have to start paying your student debt as soon as you hit the income threshold, even if you are still studying. |
You also still have to pay your debt if you’ve moved overseas. This used to be a loophole – worth $20m-$30m a year in lost revenue – but it was closed in 2016. | You also still have to pay your debt if you’ve moved overseas. This used to be a loophole – worth $20m-$30m a year in lost revenue – but it was closed in 2016. |
Universities rely too much on foreign student fees, auditor says | Universities rely too much on foreign student fees, auditor says |
How much do I have to pay? | How much do I have to pay? |
The amount you pay rises as you make more money. | The amount you pay rises as you make more money. |
Under the new rules, those on the lowest bracket (more than $44,999 but less than $51,957) will have to pay 1% of their total income. For someone earning $45,000 before tax – or $865 a week – it would be $8.60 a week. | Under the new rules, those on the lowest bracket (more than $44,999 but less than $51,957) will have to pay 1% of their total income. For someone earning $45,000 before tax – or $865 a week – it would be $8.60 a week. |
Those earning between $51,957 and $58,379 will have to pay 2%, and so on, rising to a maximum of 10% for those over $131,989. | Those earning between $51,957 and $58,379 will have to pay 2%, and so on, rising to a maximum of 10% for those over $131,989. |
It’s important to note that you pay a percentage of your total income – not a percentage of your debt. | It’s important to note that you pay a percentage of your total income – not a percentage of your debt. |
The move will generate $345.7m in savings until 2020-21. Previously, any extra contributions you made offered you an extra discount on your debt, but this policy has been repealed. | The move will generate $345.7m in savings until 2020-21. Previously, any extra contributions you made offered you an extra discount on your debt, but this policy has been repealed. |
Your total debt should be included on your tax return, and can be viewed on the MyGov website. You can also contact the ATO to ask for updates. | Your total debt should be included on your tax return, and can be viewed on the MyGov website. You can also contact the ATO to ask for updates. |
As well as Hecs, it includes other related debts like Fee-Help (for full-fee paying students), Vet Fee-Help (for vocational colleges), OS-Help (for when you study overseas or are on exchange) and SA-Help (when you take a loan to pay your $149 student services amenity fee). | As well as Hecs, it includes other related debts like Fee-Help (for full-fee paying students), Vet Fee-Help (for vocational colleges), OS-Help (for when you study overseas or are on exchange) and SA-Help (when you take a loan to pay your $149 student services amenity fee). |
How long do I have? | How long do I have? |
A Hecs debt is effectively an interest-free loan. Rather than charging you money, the government indexes your debt to the consumer price index – the amount goes up every financial year, but by not more than the rate of inflation, so the effective change is zero. | A Hecs debt is effectively an interest-free loan. Rather than charging you money, the government indexes your debt to the consumer price index – the amount goes up every financial year, but by not more than the rate of inflation, so the effective change is zero. |
This means it shouldn’t cost you more to pay off your Hecs over a long time, and there is no time limit to pay it off. | This means it shouldn’t cost you more to pay off your Hecs over a long time, and there is no time limit to pay it off. |
The yearly indexation only applies to debts older than 11 months, and it happens every 1 June. | The yearly indexation only applies to debts older than 11 months, and it happens every 1 June. |
However, the government’s changes have also created a new a lifetime cap on all Hecs loans of $104,440 – starting on 1 January 2019. Previously there was only a cap on postgraduate, full-fee and vocational loans. The cap is higher for those studying medicine, dentistry or veterinary science ($150,000) | However, the government’s changes have also created a new a lifetime cap on all Hecs loans of $104,440 – starting on 1 January 2019. Previously there was only a cap on postgraduate, full-fee and vocational loans. The cap is higher for those studying medicine, dentistry or veterinary science ($150,000) |
Only loans taken out after 1 January 2019 will count towards the cap – so existing debts do not. | Only loans taken out after 1 January 2019 will count towards the cap – so existing debts do not. |
Women who have a child 'face paying 30% more interest on student loans' | Women who have a child 'face paying 30% more interest on student loans' |
Can I reduce or cancel my debt? | Can I reduce or cancel my debt? |
If you are a nurse, midwife or teacher, or a maths, statistics or science graduate, you may be eligible for the Hecs-Help benefit, which will reduce your Hecs debt. | If you are a nurse, midwife or teacher, or a maths, statistics or science graduate, you may be eligible for the Hecs-Help benefit, which will reduce your Hecs debt. |
The scheme was cancelled by the government on 1 July 2017. However, because you have two years to lodge a tax return, if you were eligible in the 2016-17 financial year, you can still claim it until 30 June 2019. | The scheme was cancelled by the government on 1 July 2017. However, because you have two years to lodge a tax return, if you were eligible in the 2016-17 financial year, you can still claim it until 30 June 2019. |
If you were eligible in the 2015-16 financial year, you have until Sunday to claim it. | If you were eligible in the 2015-16 financial year, you have until Sunday to claim it. |
Eligibility criteria are quite complex, so check with the Study Assist website and the Australian Taxation Office. | Eligibility criteria are quite complex, so check with the Study Assist website and the Australian Taxation Office. |
In special circumstances, you can also have some of your Hecs debt cancelled. | In special circumstances, you can also have some of your Hecs debt cancelled. |
If you failed a subject, or had to withdraw from a subject due to illness or other circumstances, you can apply to your university or education provider to have the debt for that subject cancelled. | If you failed a subject, or had to withdraw from a subject due to illness or other circumstances, you can apply to your university or education provider to have the debt for that subject cancelled. |
If you withdrew after the census date without a special circumstance, you still have to pay the Hecs debt for that subject. You also can’t cancel the debt for a subject if you successfully completed it. | If you withdrew after the census date without a special circumstance, you still have to pay the Hecs debt for that subject. You also can’t cancel the debt for a subject if you successfully completed it. |
After revelations that many private colleges were exploiting the Vet-Fee loan system, the government also introduced debt cancellations if your vocational provider committed “unacceptable conduct” – for example, if you were pressured into signing up for a course, were offered money or goods to sign up, or were lied to about how much the course cost. | After revelations that many private colleges were exploiting the Vet-Fee loan system, the government also introduced debt cancellations if your vocational provider committed “unacceptable conduct” – for example, if you were pressured into signing up for a course, were offered money or goods to sign up, or were lied to about how much the course cost. |
Australian universities | Australian universities |
Australian education | Australian education |
Tax | Tax |
Australian economy | Australian economy |
Students | Students |
news | news |
Share on Facebook | Share on Facebook |
Share on Twitter | Share on Twitter |
Share via Email | Share via Email |
Share on LinkedIn | Share on LinkedIn |
Share on Pinterest | Share on Pinterest |
Share on WhatsApp | Share on WhatsApp |
Share on Messenger | Share on Messenger |
Reuse this content | Reuse this content |