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University Debt Explained: Paying Off HELP & Other Student Loans

Written by:

Kellie Amos


November 5, 2020

Last updated

August 12, 2022

Reading time

5 minutes

Kellie Amos

Kellie Amos is a contributing writer for Oiyo. She has a Bachelor of Business in Marketing and a Bachelor of Creative Industries in Creative & Professional Writing from the Queensland University of Technology. Kellie has previously produced content for a range of finance companies, entertainment publications, and fintechs.

Understanding student debt in Australia

When it comes to our studies, debt is often the last thing on our mind. In Australia, our government system allows for many of us to commence our studies without having to pay a cent upfront. The market for student loans is also evolving at a rapid rate, enabling more people to join the education system than ever before. Of course, university debt will inevitably catch up to most students, regardless of how they choose to fund their studies. In January 2019, the Australian Taxation Office (ATO) reported:

“There are over 3.2 million Australians with outstanding student loan debts, totalling $66 billion.”

If you’re graduating or looking to learn more about student debt, here’s a quick rundown of what you need to know.

Government benefits

The Australian government offers financial assistance to eligible students that attend Commonwealth-supported institutions. Basically, university goers can apply for the Higher Education Loan Program (HELP) and vocational students can apply for the Vocational Education and Training (VET) student loan program.

To be eligible for either, you usually need to be an Australian citizen, hold a New Zealand special category visa or a permanent humanitarian visa. Of course, there are a number of other requirements too. You can use the tool on the StudyAssist website to work out exactly what you’re eligible for.

HELP: How it works

Different HELP benefits will cover different parts of your tuition or study costs. Your overall HELP debt will then encompass all of these unpaid debts. That means, you can take out multiple HELP loans with the government to cover different situations.

For example, you could have a HECS-HELP loan to cover your tuition fees and take out a OS-HELP loan to cover the cost of overseas studies.

Ultimately, all fees will be added to your student debt as soon as enrolments are finalised (the census date). So if you drop out of a subject after the census date, you’ll still be charged for it.

You’re required to start paying back your debt once you earn above a certain amount. Naturally, the more you earn the more you’ll have to pay back. Once you’re earning enough, your repayments will be made through the tax system come end of financial year (EOFY). Often, your employer will withhold some of your pay to cover your repayments. You won’t have to pay a cent though, until you file your tax return for the year.

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Wondering how much university debt you have?

You can check your balance anytime via MyGov’s online ATO services.

How much do you have to repay?

You have to repay your HELP debt once you reach the compulsory repayment threshold.  The threshold changes every year and is currently $45,881 for the 2020-21 income year.

When you start earning above this, the government will begin deducting your HELP debt from your pay. How much that is will depend on your income before tax. These are the repayment rates for the year to June 30, 2021:

Annual income threshold 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%
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Important note!

If you exceed the minimum repayment threshold while studying, you still have to make repayments. Make sure you check the ATO website every year to ensure you’re under the thresholds.

How do you repay it?

Your HELP debt will be repaid through the tax system once you’re over the compulsory repayment threshold. You can make additional, voluntary payments to the ATO at any time though, via MyGov.

Bear in mind that if you choose to make any early repayments, you’ve got to be careful with timing. If you don’t make your repayment before you lodge your tax return, the ATO may still request a compulsory payment.

Other student loans

Although it’s not the norm here in Australia, you can get other forms of student loans to finance your studies. Increasingly, lenders are popping up offering financial support for degrees and other vocational programs. Generally, these are just different types of personal loans set up in collaboration with specific universities or institutions.

Personal loans can also be used to finance other things related to your studies, such as:

  • Your books and other equipment
  • Rent and living expenses
  • A car purchase
  • Overseas study expenses

How much do you have to repay?

Repayments on a personal loan will vary a lot between providers. Your repayments will usually be a percentage of the amount your borrowed plus interest. Additional fees may also apply.

Given the variation in these types of student loans, it’s hard to say exactly how much you’ll owe. There are a number of online calculators you can use to work out your repayments and the total cost of a personal loan. MoneySmart’s personal loan calculators can give you a good indication on where you stand.

How do you repay it?

When you take out a personal loan you should have a clear idea of when your repayments are due. Personal loan repayments can be made monthly, weekly, or fortnightly – depending on the terms of your agreement with your lender. These days, most lenders will require you to set up an automatic direct debit for repayments. So, you won’t have to remember to make the payment yourself, just ensure there’s enough money in your account for it.

Make sure to clarify the repayment terms with your lender, if you’re ever unsure about what’s required from you.

Should you aim to pay off your debt early?

If you’ve finished your studies and landed a new job, you may be wondering if it’s best to just pay off all your university debt now. Although it may seem like the answer is obvious, it’s not quite as clear cut as you may think.

In the past, you could get a discount on voluntary repayments made to your HELP debt but this has since been removed. Without this financial incentive, there’s no real reason to rush paying off your government debt ahead of time. Unless, of course, you can afford to!

Financial advisors like Melissa Browne, consider HELP loans to be ‘OK’ debt and instead encourage students to focus on paying off personal loans and other credit first.

Ultimately, we’re not financial advisors, so if you’re ever unsure about your university debt consider seeking assistance from a qualified professional.

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Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.


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