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Loans ease fees burden

Author: Neena Bhandari
Date: 19/12/2013
Words: 449
Source: SMH
        Publication: Sydney Morning Herald
Section: Supplement
Page: 8
You can study now, pay later, writes Neena Bhandari.

University education can be expensive, but think of it as an investment that will reap dividends for a lifetime by boosting your career prospects.

If you are worried about the cost of higher education, the government has a HECS-HELP (Higher Education Contribution Scheme - Higher Education Loan Program) scheme for eligible commonwealth supported students.

The HECS-HELP loan can assist you to pay tuition fees for your degree(s) now while allowing you to defer repayments until your earnings reach the minimum income threshold.

The government pays the loan amount directly to your university on your behalf and a HECS-HELP debt is recorded with the Australian Tax Office (ATO).

Once your income exceeds the compulsory repayment threshold ($51,309 for 2013-14), irrespective of whether you are still studying, a percentage of your earnings will be automatically paid to the government through the ATO until your fees are repaid.

The percentage increases as your income increases, so the more you earn, the higher your repayment will be.

For example, the repayment rate for 2013-14 is 4 per cent for those earning between $51,309 and $57,153 and 6 per cent for income of $71,278 to $77,194.

The minimum threshold limit for repayment can also vary.

The ATO will calculate your compulsory repayment for the year and include it on your income tax notice of assessment.

You must advise your employer if you have an accumulated HECS-HELP debt.

In addition to compulsory repayments, you may choose to make voluntary repayments as well. If you make a voluntary repayment of $500 or more, you will receive a bonus on the repayment amount.

There is no limit to the amount you can borrow under HECS-HELP. You may use a HECS-HELP loan for the whole amount of your student contribution or pay your full contribution or pay part of your contribution up front.

There is a 10 per cent government discount on full contribution; partial contributions of $500 or more are also eligible for discount. But this may change from January 2014, subject to the passage of legislation. HECS-HELP loans don't incur any real interest, but your debt is indexed each year on June 1 by the ATO to reflect changes in the consumer price index.

For example, the indexation rate for 2013 was 2 per cent, whereas for 2009, it was 3.9 per cent. Indexation is only applied to the part of debt which has been unpaid for 11 months.

Any student, who is an Australian citizen or a permanent humanitarian visa holder and has enrolled with an approved provider in each unit of study by the census date, is eligible for a HECS-HELP loan.

Commonwealth supported places are available at all public and various private universities.

For more information visit

© Copyright Neena Bhandari. All rights reserved. Republication, copying or using information from any content is expressly prohibited without the permission of the writer and the publication.  

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