What Is HECS In Australia Explained: How Does It Work?

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Students want to know the eligibility criteria for the HECS loan in Australia, including repayment options.


Are you looking for government assistance to finance your tertiary education? You can get a HECS Help Loan to pay for your studies at public universities and private higher education providers.


This student loan is helping students who can not afford a university education. The program enables eligible students to defer tuition fees from a Commonwealth Supported Place.


Learn about HECS in Australia, who can apply for it, eligibility criteria, how it works, and its application procedure.



1. What Is HECS?


The Higher Education Contribution Scheme (HECS) is a student loan system designed by Chapman. The scheme assists millions of Australians who face severe financial hardship and can't access higher education.



2. What Does A HECS-Help Cover?


A HECS-HELP loan only pays your 'Student Contribution Amount' of your degree at a public university or a private higher education provider in a Commonwealth-supported place. It covers all or a portion of your tuition fees up to a HECS-HELP loan limit.


This loan doesn't cover the costs of accommodation, study materials, and laptops.



3. What Is HECS Eligibility?


All domestic students can enrol in a CSP for their undergraduate degree program. However, not all of them are entitled to access a HECS-HELP loan. So, before applying, you must understand the eligibility criteria.


Any student attending a university course or an approved higher education enrolled in a Commonwealth-supported place can access HECS-HELP to pay for their studies. They do not need to make an upfront payment when choosing this option.


  • You should be an Australian citizen and fulfil residency requirements (must have studied at least one course in Australia)

  • You should hold a New Zealand Special Category Visa and fulfil the residency requirements.

  • You should have a permanent humanitarian visa.

  • You need to study at a Commonwealth-supported institution.

  • You should be enrolled in each subject or unit at your university by the census date.

  • You should submit the HECS-HELP form and a valid Request for Commonwealth support to your provider before the census date. 

  • You should have an available HECS-HELP balance.

  • You should meet the completion rate requirements.

  • You need a unique student identifier number (USI) before the first census date.

  • You should not undertake more than two years' worth of higher education study in one year unless your provider has allowed you to take a higher load.

  • You need adequate student learning entitlement.



4. Commonly Used Terms In HCS-HELP Loans


  • What Is HECS Debt? It is the loan taken out under HECS to pay the tuition fee of a university degree program.


  • HECS Contribution: Charge imposed on students for studying a course.


  • Census Date: The last date for your VET Student Loan and HELP loan enrolment. On missing the census date, you will not get the loan benefit.


  • Repayment Rate: It is the percentage of the income paid by the student each year towards a HECS debt.


  • Repayment Threshold: This is a certain amount of income at which the HECS-HELP loan repayment rate starts.


  • Repayment Income: The repayment income is calculated based on: Taxable income for an income year, total net investment losses, total fringe benefits amount as mentioned on the income statement, super contributions, and exempted overseas employment income.


  • Commonwealth Supported Place: It can be a university or higher education provider where the government pays a portion of your course fees. 


It is the place where:


  • The Commonwealth Government pays part of the study fee 

  • The student contributes to the remaining part


If students have a sponsorship or fee waiver for individual units or courses, the government may cover some or the entire student contribution.


To enrol in a Commonwealth Supported place, students must submit the Commonwealth Assistance Forms (CAF / eCAF) online.



5. Is HECS The Same As HELP?


  • HECS stands for Higher Education Contribution Scheme. It was introduced in 1989. With the addition of a loan to HECS, the scheme got renamed HELP – Higher Education Loan Program.


  • HELP is a student loan program that offers loans to eligible students at TAFE, university, or college.


  • HECS-HELP is a loan offered by the Australian government to educational institutions. It covers student contribution when enrolling in a university program or higher studies.



6. What Is HECS vs Fee-Help?


A HECS-HELP loan is only for students enrolling in a Commonwealth Supported Place. It is to financially support those students who study at public universities and other approved private institutions offering higher education.


FEE-HELP is for domestic-fee paying students that study any course at an approved provider. Under this program, students can borrow money from the Commonwealth to cover some or the entire tuition fees. This loan is available only up to the existing HELP loan limit.


HECS-HELP and FEE-HELP loans don't cover accommodation costs, textbooks, or laptops.



7. How Much Can A Student Borrow With HECS-HELP?


The maximum HECS-HELP loan limit in 2021 was $108,232. 


Such government study assistance is adequate to pay the tuition fee for any professional degree, postgraduate, or research study program.



8. How Does HECS Work?


HECS-HELP loans are for Commonwealth-supported students studying at public universities and approved by privately-run higher education providers.


Eligible Commonwealth-supported students must complete a Payment Options Form and return it to the institution. The form states if the student is paying HECS fees upfront, he gets a 25% HECS-HELP payment discount, or they choose to defer the payment by requesting Commonwealth to pay their HECS on their behalf.


In the case of an upfront payment, the Commonwealth pays the remaining 25% to the educational institution from the HECS Special Account. Those who defer payment must provide their tax file number to the institution so that the Tax Office knows of their HECS debt.


The loan repayment amount is a certain percentage of your earnings that increases as your income increases. Though you don't incur any interest on this loan, it is subjected to annual indexation using the Consumer Price Index. 


The Australian Tax Office calculates your mandatory repayment amount for each year and includes it on the tax notice.


The HECS repayment should start when the HECS repayment income reaches the mandatory repayment threshold that adjusts each year. 


Currently, this threshold is $55,874 per year. When income goes beyond this threshold, the repayment rises in your income tax assessment by at least 1% of your income.


Students can make voluntary repayments through the tax system. The money goes straight into the HECS Special Account. HECS debtors do not need to repay if they earn below the repayment threshold value.


They can defer repayments if they show that such payments could lead to acute financial hardship.


HECS debts get cancelled on death, and the deceased person's family or other beneficiaries do not have to repay the remaining debt.


Repayment Threshold -  2020-2021 Repayment Rate
Below $46,620 Nil
$46,620 - $53,826 1.0%
$53,827 - $57,055 2.0%
$57,056 - $60,479 2.5%
$60,480 - $64,108 3.0%
$64,109 - $67,954 3.5%
$67,955 - $72,031 4.0%
$72,032 - $76,354 4.5%
$76,355 - $80,935 5.0%
$80,936 - $85,792 5.5%
$85,793 - $90,939 6.0%
$90,940 - $96,396 6.5%
$96,397 - $102,179 7.0%
$102,180 - $108,309 7.5%
$108,310 - $114,707 8.0%
$114,708 - $121,698 8.5%
$121,699 - $128,999 9.0%
$129,000 - $136,739 9.5%
$136,740 and above 10.0%   



9. How To Apply For HECS?


 Before you can apply for a HECS-HELP loan, you need a few things:


  • A tax file number


  • A HECS-HELP and Request for Commonwealth support form from your university. Complete this form and submit it to your university or higher education provider before the census date. Mention your preferred billing option, such as upfront payment or partial payment and defer the rest fee amount or the entire payment via the HECS-HELP loan.


  • A USI Number - (Unique Student Identifier) before the first census date.



10. How To Check HECS-HELP Debt Balance?


There are two ways to check your HECS balance:


  • Contact the Australian Taxation Office and provide them with your Tax File Number. They will verify your details and tell you your available balance.


  • Alternatively, you can view your HECS-HELP balance on the myGov website. Ensure you have linked your account to the Australian Taxation Office so they can access and retrieve your balance details. 



11. Ways To Repay A HECS-HELP Loan


Students can repay their HECS-HELP debt via the taxation system only when their income reaches the minimum repayment threshold. 


There are two ways to make the payment:



Compulsory Repayments


At the time of starting a new job, make sure you inform them about your HELP debt. Do this by ticking a box on the Tax Declaration Form you will fill and submit before commencing work.


Your employer will withhold extra tax from your monthly salary based on your yearly Repayment Income to cover your projected HECS-HELP debt.


For HEC debtors working in multiple jobs, each employer will withhold tax to cover your HECS-HELP loan based on the salary they pay you. 


Suppose your combined salary from all employers is above the minimum repayment threshold. In that case, you can start repaying your HECS-HELP debt while filing your tax return.


Keep a record of your receipts and claim deductions for all entitlements. It will help lower your Repayment Income and the compulsory yearly repayment amount.



Voluntary Repayments


You can also make voluntary repayments to the ATO to reduce your debt. For repayments over $500, a 15% bonus is added to the repayment amount.



12. Conclusion


Aussies are fortunate to have government funding that covers the majority of the tuition fee for a university degree. 


Furthermore, considering most high-paying and fastest-growing professions often require a university qualification, the help of a HECS-Help loan becomes vital to prepare for future careers. 


So, before applying for any degree program, don’t forget to check whether it is entitled to a HECS-Help loan.


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