How soon will you have to start paying off your university HELP debt?

Angus Kidman 19 December 2017

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Arguments over the income level when repayments start have a while to run yet.

The federal government's 2017 Budget included a proposal to lower the income level at which university students have to start paying off their HELP debt to $42,000. That was a controversial idea, in part because $42,000 is only 20% above the minimum wage.

In any event, there wasn't enough support for the idea in the Senate, where the current government doesn't hold a majority. So now we've seen a tweak of the concept introduced as part of the mid-year economic and fiscal outlook (MYEFO). That will see the proposed threshold rise ever-so-slightly to $45,000 from 1 July 2018.

If you're earning $45,000, you'll have a 1% repayment rate. That rises to 10% for the maximum threshold income of $131,989. So far, we haven't seen a detailed table for any other changes to the threshold at the levels in between. However, the top tier in the previous proposal was $119,882 in the first year.

Other aspects of the plan remain unchanged. One of these would see the threshold raised annually in line with CPI, rather than with the current approach of indexing it based on wage growth. That's actually likely to make the threshold rise faster since wage growth has been stagnant in recent years.

One other tweak: there's a proposal to limit the lifetime level of student debt to $104,440 for most courses (doctors, vets and dentists have a higher limit of $150,000).

Regardless, changing the threshold will still require Senate support, and it's not yet clear whether that will be forthcoming. Federal parliament isn't due to return until February, so former students will be hanging on this question for a while.

This in itself isn't unusual. Other Budget 2017 measures are also still hanging around waiting for implementation, including the First Home Super Saver Scheme.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.

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