Paying-for-your-education-feature

Student Guide: Paying for your education

When it comes to higher education, the fees you will pay will depend on the type of institution you are attending.

If you are enrolled in a university or a private higher education institution, you will either be a fee paying student or a Commonwealth supported student. If you are enrolled in an approved Vocational Education and Training institution, you will either pay a fee or be subsidised by the state.


Fees and benefits of being a tertiary student

If you receive a Commonwealth supported place, then you will benefit from an impressively discounted fee thanks to subsidies from the Australian Government. Thus, you will only have to pay the amounts equivalent to 'student contributions' for every unit of study.

Further assistance is available from the Government as there are five different types of HELP loan programs to aid you in covering the costs of your tuition. The type of loan most suited to you will depend on your conditions, the place you wish to study as well as your eligibility.

The loan programs available are as follows;

  • HECS-HELP is a loan designed to assist students who are in Commonwealth supported positions to cover the cost of their student contributions
  • FEE-HELP is meant to assist students in fee paying positions in covering the cost of their tuition
  • SA-HELP is a loan program that helps qualifying students in paying for student services and amenities in full or in part
  • OS-HELP is designed to help undergraduate students in Commonwealth supported positions to pay for the cost of their studies abroad
  • VET FEE-HELP is designed to assist students who are in higher-level vocational education and training courses at approved institutes to cover the cost of their tuition.
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An overview of the HECS-HELP loan program

The HECS-HELP loan program is more than just a lending scheme. It's designed to help eligible Commonwealth supported students cover the amounts they owe for student contributions. However, if you pay $500 or more of your student contribution in advance, you can get a 10% discount thanks to the HECS-HELP program.

Note that legislation is in the works that will remove the discount as of 1 January, 2014, if it passes.

At the moment, the way the discount works is that it increases the value of your advance payment, which means you won't have to pay as much if you cover the full costs in advance or you will be required to borrow less if you pay part of your costs in advance and take out a loan for the remaining amounts.

However, there are certain conditions you have to meet to be considered eligible. First of all, you need to be a student in a Commonwealth supported position. You also need to be a citizen of Australia or the holder of a permanent humanitarian visa. You need to make sure you are enrolled with a higher education provider for each unit by time the census date rolls around.

HECS help overview

Furthermore, you must have read the Information for Commonwealth Supported Students and HECS-HELP booklet. Last but certainly not least, you must fill out and submit a valid Request for Commonwealth support and HECS-HELP form to your provider by time the census date rolls around.

In terms of costs, the HECS-HELP loan won't cost you any interest, but it will be indexed on an annual basis based on the changes made to the Consumer Price Index (CPI) to ensure the amount of money you borrowed maintains its true value. This modification is made by the Australian Taxation Office (ATO) on 1 June of every year and applies to any loan amounts that you haven't paid for a minimum of 11 months.

How does HECS-HELP work?

While the HECS-HELP loan program can help reduce the student contribution amounts you pay, it's main goal is to help you if you don't have the money to pay these fees in advance by allowing you to get a degree and start paying once you've gotten a job. Thus, there are three main ways in which this system can help you obtain your university degree.

  1. Firstly, if you have some money, whether it's money you've saved up or money your parents are giving you, you can pay your fees in full in advance and get a 10% discount. This translates into quite a significant amount of money saved. For example, you can save approximately $360 on a full-time course featured in the first HECS-HELP band, like nursing, which costs $3,598.
  2. If you can't pay the entire amount in advance, you can still make a partial payment and if it exceeds $500, you still get a 10% discount on the amount you are able to pay. The more money you can pay up front, the larger the discount will be. For example, if you can afford to pay $1,000 in advance, that leaves you with a loan of only $2,498 to be paid once you get a job.
  3. Last but certainly not least, you can pay the entire cost after you've completed your degree and have gotten a job. The main advantages are that you don't need to pay off the loan until you are earning over a certain amount and HECS-HELP loans do not incur interest charges.

How does deferring payment work?

The HECS-HELP loan program is designed so that you only have to start paying back your loan once your taxable earnings exceed $51,309 p.a. When this happens, 4% of your paycheque will automatically be redirected to cover the cost of the HECS-HELP loan. As your pay increases, so too will this percentage.

Note, though, that it will not exceed eight per cent of your earnings and this percentage will apply only once your salary reaches $95,288. These income levels apply for 2013-2014 and are adjusted every year. The repayment percentages for 2013-2014 are as follows:

Income levelRepayment percentage rate
Less than $51,3090%
$51,309 - $57,1534%
$57,154 - $62,9974.5%
$62,998 - $66,3085%
$66,309 - $71,2775.5%
$71,278 - $77,1946%
$77,195 - $81,2566.5%
$81,257 - $89,4217%
$89,422 - $95,2877.5%
More than $95,2888%

Also, keep in mind that while interest does not apply to HECS-HELP loans, your loan will increase with time as it's adjusted annually to ensure it stays in line with the CPI.

You can also choose to pay off your loan sooner by making voluntary repayments to the ATO, separate from the mandatory repayments. For every payment you make that is $500 or larger, you will receive a 5% discount, which will be deducted from the total amount you owe. Note that this 5% applies to the amount of the repayment, so if you make a voluntary repayment of $500, you will receive a discount of $25. This discount, however, might be removed as of 1 January 2014 if the legislation is passed.

Note that if you are a full-time university or TAFE student, there's a chance you could qualify for Austudy benefits or Youth Allowance for further assistance. Youth Allowance is designed for full-time students and apprentices who are between 16 and 24 years old. Austudy benefits are for students and apprentices who are over 25 years old. Your eligibility for these benefits will be determined based on income and asset tests.

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An overview of the FEE-HELP loan program

The FEE-HELP loan program is designed to help students who are in full-fee positions cover the partial or entire cost of their tuition fees. Note that these funds cannot be utilised for additional study expenses such as books or lodging. The maximum amount you can borrow under this program is referred to as the FEE-HELP limit and the amount that you can still access once you've started using this scheme is known as the FEE-HELP balance.

FEE-Help Overview

The eligibility conditions for this program are as follows:

  • You must be a student with a provider approved under the FEE-HELP scheme or with Open Universities Australia
  • You must be a citizen of Australia or hold a permanent humanitarian visa or if you're an overseas-trained professional you need to have a permanent visa and will be a resident of Australia for the entire time you will be studying
  • You must enrol in a unit of study that qualifies by the time the census date rolls around for that particular unit
  • You must not have reached the FEE-HELP ceiling
  • You must also provide the institution with a valid Tax File Number (TFN) or submit a Certificate of application for a TFN if you don't have one.

The maximum amount you can borrow is $116,507 if you are following medicine, dentistry or veterinary courses or $93,204 for other courses. Note that these limits are valid for 2013 and are adjusted every year. These limits are valid for your entire lifetime, meaning that they can't be increased or reset, regardless of how much you pay back.

Remember:

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If you are applying for a FEE-HELP loan for an undergraduate course, note that there is a fee of 25%. However, this fee is not considered part of the limit. You will not have to pay this fee if you need the money for:

  • Postgraduate courses, including any higher degrees obtained as a result of research
  • An enabling course
  • Study via Open Universities Australia
  • Bridging study for overseas-trained professionals.

Note that FEE-HELP loans can only be used for eligible units of studies, which means that the unit in question must be a component of a domestic course of study that requires you to pay fees and will lead to some form of higher education diploma, such as a Bachelor Degree, Graduate Diploma or Doctor of Philosophy. The unit must also be offered by an approved provider or by the Open Universities Australia.

A unit that is part of bridging studies for overseas-trained professionals is also considered to be eligible.

As long as you have not previously accessed the FEE-HELP system or you haven't reached your limit, you can apply for assistance regardless of any other type of study you previously undertook or any other debt you might attracted.

Repaying your FEE-HELP loan works just like the repayment of a HECS-HELP loan, meaning that a certain percentage will be automatically deducted from your paycheque once you reach a certain threshold. This percentage increases as your income increases. So, once you reach a wage of $51,309 per annum, 4% will automatically be deducted from your earnings to cover your FEE-HELP loan.

Once you reach $95,288 per annum, eight per cent will be deducted from your total income. The relevant income levels and repayment percentages are featured in the table below:

Income levelRepayment percentage rate
Less than $51,3090%
$51,309 – $57,1534%
$57,154 - $62,9974.5%
$62,998 - $66,3085%
$66,309 - $71,2775.5%
$71,278 - $77,1946%
$77,195 - $81,2566.5%
$81,257 - $89,4217%
$89,422 - $95,2877.5%
More than $95,2888%

Like with the HECS-HELP loan scheme, if you choose to make additional voluntary payments, you will receive a discount of 5% which applies to the payment being made in advance, rather than the total amount you owe.

The table below shows some of the important differences between the two types of loans.

Description

HECS-HELP

FEE-HELP

Who is it for?

Commonwealth supported students

Full fee-paying students

What restrictions/benefits do I have?

10% discount on fees if paying a minimum of $500 in advance

Lifetime limit – once you take out the max amount you can't access anymore funds, regardless of how much you've paid back

How much can I borrow?

No limit on loan

Max $116,507 for medical, dentistry or veterinary science courses or $93,204 for other courses

Eligibility criteria

  • Have a Commonwealth supported place

  • Australian citizen or permanent humanitarian visa holder

  • Be enrolled in every unit by the census date

  • Read the Information for Commonwealth supported students and HECS-HELP booklet

  • Submit the relevant Request for Commonwealth support and HECS-HELP form by the census date

  • Studying with an eligible FEE-HELP institution or Open Universities Australia (OUA)

  • Australian citizen or holder of a permanent humanitarian visa and be a resident in Australia for the duration of study or a permanent visa holder who is taking bridging study for overseas-trained professionals and will be residing in Australia for the duration of your courses

  • Enrolled in an eligible unit by the census date

  • Have not reached the FEE-HELP limit

  • Provide a valid Tax File Number (TFN) number or proof you have applied for a TFN number

Other considerations

  • 25% loan fee for undergraduate courses

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