Are you the type of person who doesn’t like having debt as a burden on their shoulders?
If this sounds like you, then this article will have some tips for you on how to pay your HELP (Higher Education Loan Program) debt quickly.
It’s very important that you know how to repay your HELP debt, so you can pay it off and move on with your life.
The fundamentals of HELP
If you have a HELP debt your repayments will begin once you start earning above the HELP debt threshold from your employment income or any other assessable income that will be included in your annual tax return. For the 2017 –2018 financial year the HELP debt threshold is $55,874.
The HELP repayment income is the total of the following amounts obtained from your income tax return including:
- PAYG Income
- Income from a rental or investment property
- Reportable fringe benefits
- Bank interest
- Reportable super contributions
How to make HELP debt disappear sooner rather than later?
A great way to repay your HELP debt quickly is through voluntary repayments, when you can afford to wipe out a bit more of your debt. You can make HELP voluntary repayments at anytime of the year. However, there are some points to be aware of:
- Making a voluntary repayment does not make you exempt from compulsory repayments.
- Your debt increases annually in line with the Consumer Price index on June 1st.
- If you ever find you have a large tax payable in your tax return due to your compulsory HELP repayment, you should check with your employer to ensure they are taxing you correctly each week.
- Even if you move overseas to work temporarily or permanently, the ATO still expects you tomake a compulsory HELP repayment if you meet the income thresholds.
HELP Repayment thresholds and rates.
2017–18 repayment income thresholds and rates for HELP, SSL, ABSTUDY SSL and TSL |
|
| Repayment income (RI*) | Repayment rate |
| Below $55,874 | Nil |
| $55,874 –$62,238 | 4.0% |
| $62,239 –$68,602 | 4.5% |
| $68,603 –$72,207 | 5.0% |
| $72,208 –$77,618 | 5.5% |
| $77,619 –$84,062 | 6.0% |
| $84,063 –$88,486 | 6.5% |
| $88,487 –$97,377 | 7.0% |
| $97,378 –$103,765 | 7.5% |
| $103,766 and above | 8.0% |
The way your help repayment is calculated is based on your taxable income and what threshold you fall under. For example,if your taxable income/repayment incomeis $60,000 then your repayment will be calculated as ($60,000 * 4.0% = $2,400).
If further advice is required on how to deal with your HELP debt, please don’t hesitate to contact us by email at advice@bfspartners.com.au or by phone on (02) 8094 8990.