Revised Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)Chapter 1 Minimum repayment income for HELP debts
Summary
Under HESA, a person with a HELP debt is only required to start repaying that debt when their repayment income exceeds a certain amount, called the 'minimum repayment income'. ('Repayment income' is defined in section 154 5 of HESA). As a person's income increases, the rate at which they repay their HELP debt also increases.
For the 2016-17 income year, the minimum repayment income is $54,868, and a person whose income exceeds that amount but is less than $61,120 is liable to repay an amount of their HELP debt equal to 4 per cent of their income.
From the start of the 2018-19 income year, the amendments to HESA made by Schedule 1 will establish a new minimum repayment income ($51,956), as well as setting a repayment rate of 2 per cent for people whose incomes exceed that amount but are less than $57,730.
These amendments will have flow-through effects for other loans schemes, including the Trade Support, Student Start-Up, and Student Financial Supplement Scheme loan schemes.
Detailed explanation
Higher Education Support Act 2003
Item 1
Section 154-10 of HESA provides for the minimum repayment income for an income year, that is, the amount that a person's repayment income must be above before they will be obliged to start repaying their accumulated HELP debts.
Paragraph 154-10(a) currently provides that the minimum repayment income for the 2005-06 income year was $36,184. This amount has since been indexed every year, and for the 2016-17 income year is $54,868. Item 1 of Schedule 1 will repeal and substitute paragraph 154-10(a) and set a new minimum repayment income for the 2018-19 income year of $51,956.
This amount is indexed under section 154-25 of HESA for later income years.
Item 2
Section 154-20 of HESA contains a table which lists repayment income thresholds and the applicable percentage rates for the compulsory repayment of HELP debts.
Item 2 will repeal and substitute the table in section 154-20. For the 2018-19 income year a person would not make a repayment if their income was $51,956 or less. The applicable repayment incomes and repayment percentages would be as follows (for later income years, the income amounts would be indexed under section 154-25):
- •
- from $51,957 but less than $57,730 - 2%
- •
- from $57,730 but less than $64,307 - 4%
- •
- from $64,307 but less than $70,882 - 4.5%
- •
- from $70,882 but less than $74,608 - 5%
- •
- from $74,608 but less than $80,198 - 5.5%
- •
- from $80,198 but less than $86,856 - 6%
- •
- from $86,856 but less than $91,426 - 6.5%
- •
- from $91,426 but less than $100,614 - 7%
- •
- from $100,614 but less than $107,214 - 7.5 %
- •
- from $107,214 and above - 8%.
Items 3, 4 and 5
Item 3 repeals and substitutes subsection 154-25(1) of HESA, simply to update the income year referred to in that subsection (changed from '2006-07' to '2019-20' and from '2005-06' to '2018-19') and the number of items in the table in 154-20 (changed from '1 to 8' to '1 to 9'), as a consequence of the amendments made by items 1 and 2.
Items 4 and 5 make similar textual changes to section 154-30 that are also consequent on the amendments made by items 1 and 2.
Item 6
Item 6 provides that the amendments to HESA made by Schedule 1 apply in relation to income years commencing on and after the day Schedule 2 commences, that is, to the 2018-19 income year and later income years.