In an effort to improve the sustainability of the Higher Education Loan Program (‘HELP’) and the debt recovery of the Student Financial Supplement Scheme (‘SFSS’), new repayment rates and thresholds have been set from 1 July 2019.
The current repayment rates and thresholds will be replaced with the new ones, which will have additional repayment rates and thresholds.
Specifically, a new minimum repayment income threshold of $45,881 will be introduced with a 1% repayment rate. There are a further 17 thresholds with a maximum threshold of $134,573 with a 10% repayment rate.
The SFSS repayment thresholds will also be brought into line with the HELP repayment thresholds from the 2020 income year.
The repayment thresholds will then be indexed using CPI rather than Average Weekly Earnings.
Editor: This measure was originally announced in the 2017/2018 Federal Budget, however, the Bill containing the original rates and thresholds was abandoned due to lack of support from the minor parties. The rates and thresholds discussed above are the revised amounts contained in the Act (noting that there was a one-year delay in the commencement of the changes from the re-introduced Bill).
Ref: Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018
Ref: The Tax Advisers Voice – NTAA – Edition No.285 October 2018