Proposed changes to HELP
If you’ve been following the news, you may have seen that Labor has proposed changes to the Higher Education Loan Program (HELP). These changes could affect anyone with a HELP loan, including those with Apprentice Support Loans and VET Student Loans. While these changes are not yet law, it’s important to stay informed, as they could significantly impact your repayments.
Proposed changes to HELP loans
Here’s a summary of the key proposals:
- 20% reduction in loan balances:
Starting June 1, 2025, all HELP loans, Apprentice Support Loans, and VET Student Loans will be reduced by 20%. - Changes to HELP repayment calculations:
Starting July 1, 2025, the calculation for HELP repayments will change. The minimum income threshold will increase to $67,000, and the repayment rate will shift from a fixed rate to a marginal rate.
These changes build on an earlier adjustment to HELP loan indexation, where the rate was capped at the lower of the Consumer Price Index (CPI) or the Wage Price Index (WPI). These changes were passed late last year and were applied retroactively to the 2023 and 2024 periods.
Are these changes set in stone?
As of now, these changes are not law yet. It’s expected that any new legislation for the proposed 20% reduction and repayment changes won’t be introduced until after the election. This means that the changes may only become law if Labor remains in office and is able to pass the legislation.
While these changes are possible, uncertainty remains. It’s important to stay updated on any developments.
What should you do if you have a HELP debt?
If the 20% reduction in your HELP loan balance goes ahead, there are a couple of things you might want to consider:
- Delay Voluntary Payments:
If you’re planning on making voluntary repayments, consider holding off until after June 1, 2025, to benefit from the 20% reduction. Waiting could result in a significant decrease in your outstanding balance. - Consider Deferring Your 2024 Tax Return:
Another strategy to consider is holding off on lodging your 2024 Income Tax Return (ITR) until after June 1, 2025. This would delay your HELP repayment until after the 20% reduction takes effect. However, this option carries some risks. There’s uncertainty about whether deferring repayments will be allowed, and it may depend on how the legislation is structured.
Weighing the risks
Given the uncertainty around these proposed changes, it’s important to carefully weigh your options. While the potential 20% reduction is an attractive proposition, there’s no guarantee that the legislation will pass, and there are no specifics on how it will be implemented.
Stay in touch with your accountant or financial advisor to ensure you’re making the best decisions based on your personal circumstances.
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Author: Matthew Prawirohardjo
Email: [email protected]
