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The impending changes to HELP debts

The Government has moved to put an end to ‘eternal students’ who constantly study and never earn an income and speed up the payment cycle for those with outstanding debt.

New lifetime caps on Higher Education Loan Program (HELP) debt will prevent people from constantly going to University without converting that study into a viable career. From 1 January 2019, new loan limits come into force:

  • $150,000 – for students undertaking medicine, dentistry and veterinary science courses (as defined in HESA). The new limit is more than the intended FEE-HELP limit for 2019 of $130,552.
  • $104,440 – for other students.

The new lifetime limits only apply to new loans. Existing debt is not taken into account.

New CPI indexed repayment thresholds also come into force. From 1 July 2019, the level of income at which HELP debt is repaid reduces from the current threshold of $51,957 to $45,000. Plus, the maximum repayment rate that applies will increase to force higher income earners to pay back the debt sooner. Those on incomes of $131,989 plus, will need to pay back the debt at a rate of 10% per annum (the current limit is capped at 8% once income reaches $107,214).

And, if you think negatively geared rental properties or other investments can offset the repayment rate you face, think again. ‘Repayment income’ is taxable income plus any net investment losses, reportable fringe benefits, reportable super contributions and exempt foreign employment income (that is, repayment income is global. Any employment income you earn overseas is included in the repayment income definition).

Minimum ‘repayment income’Repayment
Up to and including $44,9990%
$45,000 - $51,9561%
$51,957 - $55,0732%
$55,074 - $58,3782.5%
$58,379 - $61,8813%
$61,882 - $65,5943.5%
$65,595 - $69,5294%
$69,530 - $73,7014.5%
$73,702 - $78,1235%
$78,124- $82,8115.5%
$82,812 - $87,7796%
$87,780 - $93,0466.5%
$93,047 - $98,6297%
$98,630 - $104,5477.5%
$104,548 - $110,8208%
$110,821 - $117,4698.5%
$117,470 - $124,5179%
$124,518 - $131,9889.5%
$131,989 +10%

To discuss how this may impact your circumstances please contact PPT on (03) 5331 3711.

DISCLAIMER: The material and contents provided in this publication are informative in nature only.  It is not intended to be advice and you should not act specifically on the basis of this information alone.  If expert assistance is required, professional advice should be obtained.