When you start thinking about university, you also begin to hear words and acronyms like HECS, HELP and CSP that seem pretty important – but don’t make much sense at first.
Before you read page after page of information – here are the basics on HECS-HELP and CSP.
Who pays my fees for uni?
NOTE: The graphs in this article are not accurate representations of amounts – but are a visual representations to help explain how a CSP works. Fee amounts vary for each degree.
After the government funding has been contributed to your degree, there will be some left over for you to pay. This is called your Higher Education Contribution – your HECS (the S stands for Scheme). Eligible Commonwealth supported students can either pay their HECS fees upfront, or defer the payment with a HECS-HELP loan from the government.
What is HECS-HELP?
This is a loan from the government. You don’t have to pay your slice of the pie straight away, you can pay it later if you are eligible.
Pay the blue slice now (upfront each semester) or pay it later (defer the payment – this is called your HECS-HELP loan).
HECS = Higher Education Contribution Scheme = the type of loan you take out as a uni student to pay your contribution of your uni fees.
HELP = Higher Education Loan Program = this is the overall program that provides loans to eligible students (whether at TAFE, college or uni).
Am I eligible?
All domestic students are eligible for a CSP for their undergraduate degree. However not all domestic students are eligible to access a HECS-HELP loan. Only Australian Citizens, New Zealand Special Category Visa Holders who meet eligibility, and Permanent Humanitarian Visa Holders are eligible to defer their fees via HECS-HELP Loan. Other domestic students, such as permanent residents and New Zealand Citizens must pay their fees upfront by census date of each uni session.
How do I apply for a HECS-HELP loan?
When you enrol at uni you will be prompted to complete an online form that will ask you for your preferred billing option. You can choose to pay your fees all upfront; or make a partial payment and defer the remaining fee; or alternatively defer the whole payment via HECS-HELP Loan. You will be asked to provide your Tax File Number and then you’re all set up for HECS and HECS-HELP.
What about interest?
Your HECS-HELP loan is interest free! However, it is subject to indexation (ergh). This means as everything else changes in value, your HECS-HELP will change too, so it stays in line with changes in the cost of living. The indexation is applied on 1 June each year on debts more than 11 months old. In 2017 loans went up 1.5 per cent.
When do I pay back my HECS-HELP loan?
When your income reaches $45,000+ (maybe)
If the government’s new Higher Education Reform Package gets approved, you will start paying back your loan when your taxable income reaches $45,000. You will need to advise your employer if you have a HECS-HELP debt so your repayments can be deducted from each pay. Alternatively, a lump sum payment will be calculated when you do your annual return, which can leave you with tax bill instead of a tax return.
The more you earn, the faster you’ll be required to repay your loan. The repayment rate for the $45,000 threshold is 1 per cent (or about $9 a week). See the proposed scale here. Like the loan itself, these thresholds will be indexed at consumer price index (CPI), meaning the first threshold will increase to $45,900 for 2018-19.
When your income is less than $45,000
Repayments aren’t compulsory, but if you win the lotto, you should consider repaying it because your loan will continue to be indexed every year.
TIP: You can make voluntary repayments whenever you like through the Australian Tax Office (a good idea is to create an online account linked to your MyGov account so you can keep tabs on your HECS-HELP balance, make payments via BPAY and lots more).
Is uni worth the investment?
We’re pretty lucky in Australia that the government funds most of the cost of an undergraduate university degree. And, considering most of the fastest growing jobs and highest paying careers often require a post-school qualification, uni has become more and more important in preparing you for careers of the future.