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HECS repayment discounts reduced

This year’s Federal Budget has bought some bad news for students: discount incentives for those repaying their HECS debts will be reduced from the first of January, 2012.

The changes proposed by the government include:

  • a reduction in the HECS-HELP discount applied to up-front student contributions of $500 or more before the census date from 20 per cent to ten per cent
  • a reduction in the HELP voluntary repayment bonus applied to voluntary payments of $500 or more from ten per cent to five per cent.

The government estimates that the reductions will provide $479.5 million in savings over four years, which will be ‘redirected to support other government priorities’, including the new demand-driven funding of undergraduate places.

The good news for students and recent graduates is that there is still time to take advantage of the current discounts and bonuses. In the coming months you still have an opportunity to pay next semester’s HECS student contribution up-front or voluntarily repay as much of your HELP debt as you can.

Voluntary repayments can be made directly to the Australian Taxation Office (ATO) electronically, over the phone or by mail. Click here for more information on the ATO website.

If you intend to repay your total debt with a voluntary repayment you should do so prior to lodging your income tax return. If your tax return is completed before your voluntary payment is credited, a compulsory repayment may be raised on your income tax notice of assessment and you may not receive the bonus on the voluntary repayment.

Prior to making a payment you should also check with the ATO to see whether you are eligible for a HECS-HELP Benefit. You will most likely qualify if you are a recent mathematics, science, education, early childhood education, nursing or midwifery graduate. Your Benefit should be processed prior to making any voluntary repayments. Click here for more information.

Any outstanding amounts are repayed annually — minus the discounts — through compulsory repayments when you lodge your tax return as soon as your income exceeds the minimum threshold ($47,196 in 2011–2012). The amount that you need to repay varies according to your annual income and these amounts are indexed every year. Click here to see a chart with the 2011–2012 repayment rates.