On Tuesday this week, the Government’s legislated changes to HECs (now known as HELP) passed through Parliament meaning changes to all those who have, or have recently paid off their HECs debt.
Some may look forward to a credit being applied to their loan or even better, a refund.
New changes to HECs debts
HECs debts assist students to cover their University fees. They are interest-free, yet indexed every year in line with the Consumer Price Index (CPI) – directly associated with the rate of inflation.
The recent changes mean indexation will now be in line with either CPI or the Wage Price Index (WPI) — whichever is lower.
This is where the windfall comes in.
These changes will be applied retrospectively for the past two financial years – meaning new rates apply to indexation for both 2023 and 2024.
This means refunds are for those with current debts or who have paid off their HECs in the last two financial years.
What are the new HECS indexation rates?
The major change to indexation is the 2022-2023 year with a change to indexation of 4.1%.
This is where the majority of refunds come into play handing students significant savings and boost to their bank accounts (if their HECs was paid off in this time) or credit on their current HECs loans.
- 2022 – 2023: 7.1% – 3.2% = 4.1% less
- 2023-2024: 4.7% to 4.0% = 0.7% less
Who gets a refund?
Whether you get a refund or a credit depends on your current HECs loan.
If you completely paid off your HECS debt before indexation applied on June 1 last year, you will not get a refund or a credit.
Those who paid their HECs off in 2021 or prior – there will unfortunately be no refund for you.
But you will have been relishing a higher pay packet without HECs coming out so that is a win!
Those who will receive a credit
You will receive a credit if you had a HECS debt indexed on June 1 last year and June 1 this year.
If you still have a current HECS debt, the credit will be taken off the amount currently owing.
Those who receive a refund
If you’ve already paid off your debt, that credit will become a refund and be paid out by the ATO.
So, if you have an active ATO debt, your credit will be taken off how much you owe.
If you have nothing owing to the tax office, that’s when you’ll see the money hit your bank account!
How much will your credit or refund be?
It depends.
Basically on how much you owed when indexation was applied.
For those who are excited to see what refund may be coming, you can head to the HELP Indexation Credit Estimator tool that will shoot out a pretty accurate estimate of what you may receive.
How long til I receive my refund?
The whole process could take a few weeks. The ATO will commence allocating the refunds and credits to those with HELP loans.
refunds will be paid into the bank account the ATO has on file and credits will go directly to the exiting HECs loan.
Students won’t receive any official documentation but you will be able to see the credit applied to your loan through the myGov portal.
Let’s cross our fingers our hard-working students can receive a nice little windfall this Christmas!
