If you have a HELP debt and are experiencing financial hardship, you may be eligible to ask the ATO to defer your HELP debt for a temporary period.
If the ATO accepts your request, it means that they will put a temporary hold on your repayments.
What is a HELP debt?
Commonly referred to as HELP, the Higher Education Loan Program is a government loan program that assists students to fund their tertiary education.
When do I start making HELP debt repayments?
Once you complete your studies and earn $54,435 or above for the tax year, you are required to start making HELP debt repayments. The amount you pay each year is calculated on a sliding scale, based on your annual income. At $54,435, you pay 1% of your income as a HELP debt repayment. This rises as your income rises, up to 10% when you earn $159,664 or above (figures current for 2024-25 financial year).
Who is eligible to defer their HELP debt repayments?
If your income is above the $54,435 threshold, but you’re experiencing financial hardship, you may be eligible to defer or decrease your HELP repayments, temporarily.
The ATO considers a person to be in ‘serious financial hardship’ if they are unable to provide any of the following items for themselves, their family or dependants:
- Food
- Accommodation
- Clothing
- Medical treatment
- Education
- Other basic necessities
You may also be considered for a HELP debt deferral if you become seriously ill, have been affected by a natural disaster or face some other serious or difficult circumstances.
How do I apply for a HELP debt deferral?
The ATO states that you need to be able to prove that:
- making your HELP repayment has caused or would cause you serious hardship, or
- there are other special reasons that make it fair and reasonable to defer making your repayment.
As your tax agent, Etax can make the application to the ATO, to amend or defer your compulsory HELP repayment.
This will allow us to negotiate the reduction or deferral on your behalf. If you prefer, you can also apply to the ATO directly.
Either way, the first thing to do is complete the application form, called “Defer or amend your compulsory repayment or overseas levy form” on the ATO website.
You also need to gather the necessary documentation to support your application to defer your HELP debt. This includes evidence of your income and expense records as well as any other relevant documents showing you are in financial hardship.
Examples include:
- Official eviction notice (not a warning of possible eviction due to rental arrears)
- Pending disconnection of essential services, such as water, electricity, gas; but does not include mobile phone or internet bills
- Notice of impending legal action
- Letter from charitable organisation, re: loss of employment or inability to provide for basic necessities
- Bank notice, e.g., overdraft call or mortgaged property repossession
- Overdue medical bills
- Letter from doctor verifying the inability to earn an income due to illness or caring for a sick family member
- Final notice from school regarding payment of mandatory fees
- Funeral expenses
- Repossession notice of essential items, e.g. car, motorcycle.
What happens after I apply to defer my HELP debt?
Once the application form and your supporting evidence is submitted, the ATO will assess your claim. They may be in touch if they need to clarify anything further with you. It usually takes about 28 days for them to make a decision.
Successful application
If your application is successful, the ATO will temporarily suspend your compulsory HELP debt repayments and remove the deferred HELP amount from your tax assessment, for the specified period.
Important note: A HELP debt deferral is rarely granted for more than a year at a time. If you are still experiencing hardship after one year, you will usually need to re-apply for it to be extended.
Unsuccessful application
If your application is unsuccessful or differs from the amount requested, the ATO will send a letter outlining the reasons. If you are unhappy with their decision you are able to:
- Lodge a new application if you have any new grounds or documentation not previously supplied.
- Or apply to the ATO to review their decision.
You must request your review, in writing, within 28 days of receiving your decision notice. The ATO will inform you of their decision on your review request within 28 days. If Etax submits the application on your behalf, we will liaise with the ATO on any new application or appeal to review their decision for you.
Remember, deferring a HELP debt doesn’t make the debt go away. It is a temporary solution, and you are still responsible for repaying the debt once the deferral ends. Deferment provides relief when circumstances, beyond your control are challenging.
