HIGHER EDUCATION DEBT SOARS

UNIVERSITY debts have soared to record levels and more people are being forced to repay back loans sooner.

New Australian Taxation Office data obtained by News Corp found that in the 2018/19 financial year 3 million people owed a massive $66.5 billion in Higher Education Loan Programme (HELP) debts.

This grew by 8 per cent from the 2017/18 financial year when 2.87 million people owed $61.7 billion.

The average HELP debt is now $22,500, up from $21,500 in 2017-18 financial year.

Financial adviser Scott Haywood said despite the total debt soaring it was a cheap form of debt.

“This is one of the cheapest loans other than the bank of mum and dad that anyone can get,” he said. “But the Government has identified paying the money back as a problem and they have reduced the compulsory repayment threshold as a result.”

From July 1 Australians earning more than $45,881 annually must start repaying 1 per cent of their income towards the loan. It is significantly lower than the previous threshold of $51,957.

This will likely hit more younger Australians who are fresh out of university and in their first full-time jobs.

The repayment level increases in percentage increments up to 10 per cent for those earning more than $134,573.

An ATO spokeswoman said those with study debts did not need to provide loan information in tax returns.

“If you have a loan when you lodge your tax return and your repayment income is above the minimum repayment income, we will work out your compulsory payment,” the spokeswoman said.

The ATO also warned moving overseas did not mitigate a HELP debt.