Farrago talks higher ed: HECS repayment threshold

Friday, 6 June, 2014


Words by Michelle Tieu


The Budget has a heap of education changes for HECS-HELP. One of these is lowering the debt repayment threshold.

What is the repayment threshold?

The HECS repayment threshold is the maximum amount of income a person can earn before they are obliged to repay their debt. The threshold has increased by an average rate of $1,907 per year since 2005.

So what will happen now?

The new budget will see a change to the threshold. As of 1 January 2016 the repayment threshold will be reduced from the current $53,345 to $50,638. So university graduates working and earning $50,638 will have to pay back their HECS-HELP fees via tax.

This will be the first decrease in almost two decades. The last decrease occurred in 1997 when the debt threshold dropped by over $7,000.

The new changes however, will be far less dramatic. Compared to the Commission of Audit’s proposal of dropping the HECS threshold by over $20,000, the $2,707 cutback will be seen as relieving to some. In addition to this those earning between $50,638 and $56,264 will have their repayment rate halved. From 1 January 2016 HECS debtors within this income range will need to pay back two per cent of their university fees per year.

Is this good or bad?

It’s good if you’re eager to pay back your fees—and let’s face it, people never like paying. Many of the changes in the Budget aim to repair the country’s economy and ensure lower debt in the future. Whether this actually happens remains to be seen.