Financial assistance is available specifically for students through the Higher Education Loan Program (HELP). This program is designed to reduce up-front costs by offering affordable loans specifically for students.
Eligible students can pay their contribution amount with a loan. These are available at all public universities and some private institutions as well. However, many students and recent grads might find themselves understandably confused at the HELP repayment thresholds and rates. How does one repay their HELP debt?
Because HELP debt is designed to make achieving a higher education more affordable for all, it doesn’t take the same form as other types of debts and loans. How much you pay depends on a number of factors. In this guide, we’ll explain the HELP repayment thresholds and rates specifically for 2019 – 2020 as well as how to check how much you owe.
How Do HELP Repayments Work?
Across the globe, university financing takes many different shapes and forms. Under the Australian loan system for students, the government provides HELP loans specifically to university students. These are interest-free loans, and the balance is indexed based on the current cost of living.
What makes HELP different from other loans? Under this program, you don’t actually need to start making payments right away. You don’t make any loan payments until your income reaches a specific threshold. These thresholds change year-by-year.
However, once you reach the threshold you don’t suddenly begin making big repayments. Instead, you make payments based on how much you earn. This is called the repayment scale, and it also changes per year. You’ll begin paying just 1% of your income once you reach the threshold, and this is maxed at 10% of your income.
Why is this system based on a scale? It’s designed to reduce the tax burden on students who earn less after university. Those who have lower incomes have a lower student loan repayment obligation.
Meanwhile, those who secure a higher paying job after graduation are more likely to eliminate their HELP debt quickly. Ultimately, this system is designed to ensure Aussies can achieve their educational goals without worrying about their loan burden.
What Are the 2019 – 2020 Thresholds and Rates?
As mentioned above, you don’t need to begin paying your HELP loans back until you’ve reached the current threshold. For the 2019 – 2020 academic year, this threshold is when your income reaches $45,881. Once you reach this threshold, you’ll pay only 1% of your income.
The exact list of income thresholds and rates for HELP debt is as follows:
- Under $45,881: 0%
- $45,881 – $52,973: 1%
- $52,974 – $56,151: 2%
- $56,152 – $59,521: 2.5%
- $59,522 – $63,092: 3%
- $63,093 – $66,877: 3.5%
- $66,878 – $70,890: 4%
- $70,891 – $75,144: 4.5%
- $75,145 – $79,652: 5%
- $79,653 – $84,432: 5.5%
And it goes up from there, increasing by 0.5% until the maximum reaches 10% of one’s income. For the 2019 – 2020 year, this cap happens at $133,573. Anyone who earns over this amount will pay 10%.
These rates change on a yearly basis, so it’s important to check with the government’s Study Assist website to ensure you’re using the most up-to-date thresholds and rates.
If you’re unable to afford your repayments based on this scale above, you have options. You can apply to the Australian Taxation Office (ATO) to defer your repayment. This will only be approved if your compulsory repayment will cause serious financial hardship.
Can I Make Voluntary Payments Towards My HELP Debt?
You can always make voluntary payments towards your HELP debt. These payments are made to the Australian Taxation Office (ATO), and they can be made at any time.
If you’re interested in paying your debt as quickly as possible, you’re always welcome to make larger payments outside of the rates listed above. Depending on your debt situation, you might have a long-term debt plan. It’s important to consider how your HELP repayment fits into your long-term financial goals.
Understand Your Student Loan Repayments
The Australian HELP incentive makes it possible for students of all backgrounds to pursue their academic goals. The good news is you don’t need to worry about repaying this student loan balance until you’ve graduated and you begin to earn above the income threshold. From there, repayments are based on how much you earn.
That being said, it’s a good idea to check in with how much you owe and your payoff strategy. Carrying debt doesn’t need to be something to be afraid of, but you also need to stay proactive to ensure you pay it off on time and responsibly.
If you’re worried about your HELP repayment and how it fits into your long-term goals, we’re here to help. Our team of financial experts at Debt Busters have over 15 years of experience working with students, recent grads, and beyond to achieve a brighter financial future. Give us a call today on 1300 368 322 to discuss your next steps.