HECS Help Debt Repayment
HECS Help Debt Repayment.
It is almost impossible to survive without student loans, especially if you don’t come from a wealthy family and that might cause you to consider a HECS-HELP debt to help you clear your higher education. The sad fact is that not everyone is privileged to afford university school fees, and thus some would miss out on the opportunity of getting further studies, which is the key to a good career and future.
You may have already taken the loan, or you are thinking of taking one. You, therefore, need to do a lot of research. How do you qualify for a HECS-HELP loan? What happens when you finish studying? What are the repayment terms? It is always good to understand all these things because, at the end of the day, you are still going to clear the loan. It doesn’t matter how many years it will take. Read on to understand about HECS-HELP debt repayment.
Eligibility Requirements For A HECS-HELP Loan.
Before you are given the loan, you have to meet the requirements set by the provider. For you to be considered eligible for the credit, first, you need to be an Australian citizen who is willing to undertake at least one course with your provider. You may also qualify if you are an Australian with a permanent humanitarian visa. It is also vital that you remain an Australian resident during the period of your courses.
If you are also a New Zealand citizen and you hold a special category visa, you may be awarded the loan as long as you remain a resident in Australia for the period of the course. If you are an international student, you are exempted from getting the HECS-HELP loan. A New Zealand citizen who lacks a special category visa is also not eligible for the credit. If you are a holder of a permanent non-humanitarian visa, you will not qualify for the loan. It is essential to understand the eligibility criteria as this will help you know whether you stand any chance.
How Does The HELP Loan Work?
When you qualify for the loan, you need to know how the loan works. This is important because you will have to repay the loan after that. Once you understand how the loan works, you will be in a better position. Once they give you the HECS-HELP loan, the tuition fees are immediately charged to your student debt, usually after the census date. A census date usually refers to a period in the school calendar when enrolments have been finalised.
For most university courses, it is often a few weeks into the semester. If you happen to be enrolled in a course after the set census date, you will still rack up debt for it, even if you don’t complete the course. You are then required to pay back the money once you start earning above a certain set amount. The amount usually varies with different years, and hence, you need to confirm what the set amount is for that year. Note that the more you earn, the more you will be required to pay back. There is also an option for you to make voluntary repayments any time you want.
What Does Voluntary Repayment Involve?
With voluntary payment, you are allowed to make payments voluntarily at any time, to reduce the loan balance. If you still have debt after making the voluntary payment, you may still be required to make a compulsory repayment. This also applies if your repayment income exceeds the minimum repayment threshold.
Note that these voluntary payments are in addition to the mandatory repayments, and they are usually not refundable. This means that if you pay the voluntary amount, you cannot claim it back. What is the best time to make voluntary payments? If you plan to pay your total loan balance through the voluntary payment, it is advisable to make the repayment before you submit your tax returns. If you happen to file your tax returns before a voluntary repayment is credited to your account, note that an oversees levy or compulsory repayment may be included in your notice of assessment. If you are employed, you could have salary packaging arrangements with your employer to help to pay your loan faster.
How Much Do You Need To Pay?
You need to know the compulsory repayment threshold for you to plan yourself. For example, the compulsory repayment schedule for the 2018-2019 financial year was $51,957. It is expected to lower to 45,881 for the 2019-2020 fiscal year. When you submit your tax returns, your tax agent should help you determine how much you are supposed to repay by calculating the HECS-HELP repayment income for the year. They will then tell you how much the compulsory repayment will be. Usually, the loan rates are calculated using the consumer price index.
If you realise that making compulsory repayments will put a toll on your finances and increase hardships, you could choose to defer your payments. Doing this will only help you put your finances in order, but note that it doesn’t make the debt disappear. Even if you declare bankruptcy, the loan will not be written off. Once you get on your feet and you can earn above the minimum repayment threshold, the repayments continue. The only time your HECS-HELP loan will be cancelled is if you pass on.
What To Do If You Are Employed
If you are employed, it is always advisable to let your employer know that you have a HECS-HELP loan. This is because the employer is required to estimate and factor in the Pay As You Go. Failing to inform your employer that you have a HELP loan will mess things up because they will not do accurate estimations. Most people who are employed usually use the PAYG system to repay their HECS-HELP loan.
When you get a new job, it is always good to mark the appropriate checkbox when you are filling your taxation declaration form. If you plan to live and work overseas and you have a HECS-HELP loan, there are some things that you are required to do. First, you are required to provide your current contact details and then submit an overseas travel notification within a week of leaving Australia. This should be the case if you plan to reside overseas for more than 183 days. You are also needed to submit your worldwide income if you plan to work abroad.
Tax Tips To Help You Repay Your HECS-HELP Loan
It is good to have little tricks that will help minimise your loan repayments. Upfront payment will help you save money, more than you thought. Ensure you keep all work-related receipts and any claim dedications that you are sure, you are entitled to. This will help to minimise your taxable income and even reduce the compulsory annual repayment amount that you need to pay. If you are not sure about the deductions, and what things you can or can’t claim, it is advisable to consult with tax consultants.
Should You Pay Your Loan Early?
Many people ask this question. One thing to note is that there is no definite answer. It all depends on several things such as your expenses, your income as well as your circumstances. If circumstances allow you to pay the loan early, that’s good enough. If it doesn’t, don’t stress yourself out. Just know that just like any other debt, your HECS-HELP loan is compounded over time, usually at a very low rate. There is no interest payable on your debt; however, understand that indexation is applied, depending on changes in the cost of living. This will therefore affect how much you repay.
Are There Any Advantages Of Early Repayment?
If you choose to make voluntary contributions, you will be able to clear your loan faster than a person who doesn’t make voluntary contributions. As much as you can repay your student loan early, you don’t get any tax benefits for repaying your loan earlier. Initially, there used to be discounts for voluntary repayments, but they were discontinued in January 2017. Before making an early payment, it is good to make several considerations. When you get a job, it is highly likely that you have other priorities, such as saving for a home loan or travelling. If you weigh the two options and rule that they are more critical than the repayment of the student loan, you could choose to cease early payments. Also, if you have other loans that have a higher interest rate and compound quickly than your student loan, opt to clear these loans first. Don’t rush to make early payments, yet you have other loans, such as your home loan, which is more urgent. Remember paying off a higher interest loan more quickly will improve your credit rating.
Can You Cancel Your HELP Loan?
Are you worried that you might not be able to cancel your HELP loan? If you are, don’t fret. It is possible to cancel your loan under particular circumstances. Note that your credit will not be cancelled if you completed your units. If you also withdrew from your studies after the census date because you had something else to do, your HELP loan cannot be cancelled. For you to have your HECS-HELP loan revoked, you have to present the special circumstances.
You need to show that whatever affected you was beyond your control and made it impossible for you to complete the units you had enrolled in. You have to prove that the unique circumstance didn’t have an impact on you, until after the census date. Note that you will be required to provide supporting documents to your university or higher education provider. The provider must receive your application within one year of the withdrawal day of the units you chose not to do.
The HECS-HELP debt is an excellent option for those who want to study without having to worry above school fees. It is better than the regular loans because it doesn’t necessarily have a deadline to repay it. As much you can’t avoid it, you are allowed to repay the loan without a rush. You, therefore, need to understand how the loan works. This will help you determine whether it is worth it to ask for the loan. This loan is worth it, hence an investment.