What Happens To Hecs Debt When You Die?
When someone with a HECS-HELP debt in Australia passes away, their debt is cancelled and not passed on to their family or estate. No one else is responsible for paying it. If they earned enough that year to make repayments, the ATO may take payments up until their passing, but any remaining debt is wiped out.
What is HECS-HELP?
HECS-HELP is an Australian government loan that covers university tuition fees for eligible students. Repayments are made through the tax system once the student earns above a set income threshold. The loan has no interest but is adjusted for Inflation.
Is my HECS-HELP debt still repayable after I die?
No, your HECS-HELP debt is cancelled when you die. It is not passed on to your family or estate, and no one else is responsible for repaying it. However, any repayments due from your income before your death may still be collected by the ATO.
What about my university loans?
University loans like HECS-HELP in Australia cover tuition fees and are repaid through the tax system once your income exceeds the set threshold. Repayments are based on your income level. The loan doesn’t have Interest but is adjusted for inflation. If you never earn enough, you won’t need to repay it. When you pass away, any remaining debt is cancelled and won’t be passed to your family.
Does HECS Affect Credit Score?
No, your HECS-HELP debt does not affect your credit score. The government doesn’t report HECS debt to credit reporting agencies. But if you apply for a loan, lenders may still look at your HECS balance to check how it affects your borrowing power. So, while it doesn’t hurt your credit score, it can still impact how much you can borrow.
Salary Sacrifice HECS
Salary sacrificing for HECS means you use pre-tax income to help pay off your student loan. This can lower your taxable income, which may reduce your HECS repayments or even help you pay it off faster. But it’s important to check with your employer and a tax expert first to make sure it’s the right move for you.
Conclusion
HECS-HELP debt is wiped when you pass away it won’t affect your family or estate. While it doesn’t impact your credit score, it can reduce your borrowing power. At Blueprint Financial Services, we help you understand how HECS fits into your financial journey, whether you’re buying your first home or refinancing.
Blueprint Financial Services
PO Box 672