In Australia and New Zealand, repayment for educational assistance is typically commenced when a person files a tax return and the reported income is above the minimum repayment threshold. For Higher Education Contribution Scheme (HECS) repayment purposes, compulsory repayment is the standard repayment method that applies to most students. The PAYG (pay as you go) withholding is another HECS repayment method where automatic payments are taken from income for work, compensation benefits, or retirement. PAYG installments are payments made on an accumulated amount of HECS assistance. A student also has the option to make voluntary repayments at any time.
HECS, also known as Commonwealth Supported Students, helps to pay all or a portion of higher education fees for eligible students. Most students enrolled in Australian tertiary education are eligible for financial assistance. A student enrolled in an Australian institution that is a citizen of Australia, New Zealand, or has a permanent humanitarian visa may qualify for financial assistance through the HECS program.
Repayment under HECS may commence under several different repayment options. These repayment options are typically determined based on the former student’s income source. Additionally, it is possible that a person can switch to a different repayment method if financial circumstances change after repayment begins.
A person may enter the HECS repayment schedule under compulsory terms based on tax filings. A percentage of the annual income is used to calculate the repayment amount for that income year. Once an individual's minimum income surpasses this minimum amount, compulsory repayment commences.
Under the PAYG withholding for HECS repayments, a person may opt to have payments withheld from certain types of income. Automatic deduction from retirement income, compensation benefits, and work can go towards repaying the loan. The person is typically responsible for notifying the payer of the income to withdraw the required repayment amount.
The PAYG installment method is a possible option for a person with business or investment income. A quarterly, bi-annual, or annual HECS repayment is made based on anticipated income. The total amount of debt accumulated through HECS assistance is also used to calculate the repayment amount for this method.
Voluntary repayments are another method for paying off higher education fees. These are additional payments outside the compulsory repayment schedule. Extra payments may reduce a person’s total debt sooner than only making standard compulsory repayments. Consequently, some voluntary repayments may qualify to receive a bonus deduction from the total debt.
The rates on the compulsory or PAYG withholding HECS repayment method might be determined by a person’s annual income. PAYG installment rates may vary based on the total education debt. Repayment rates are not charged if annual income is below the minimum income threshold for the current year.
In some circumstances, payments might be deferred for Australian citizens and people with permanent visas. Citizens of New Zealand may also qualify for deferred payments if they were students before 2005. New Zealand citizens must also meet other qualifications for the HECS deferment option.