What happens to your HECS loan when you die?

What is a HECS loan?

The Higher Education Contribution Scheme, or HECS as the majority of us call it now, was introduced in 1989 for eligible domestic fee-paying tertiary students. If you studied at university prior to 1989, lucky you! The rest of us have, or at some point had, a HECS loan.  

If you want to know how much is outstanding on your HECS loan, you can find out by logging onto your myGov portal or contacting the ATO

How do repayments work?

You only start repaying your HECS loan once you earn over the HECS-HELP loan repayment threshold. For the 2021-21 income year, the threshold is $46,620. If you earn over this amount and have a HECS loan, your employer makes compulsory repayments on your behalf that are deducted from your salary.  

What happens to the loan if you die and who deals with it?

Have you ever wondered what happens to the remaining amount owing on your HECS loan when you die? Does your estate have to pay it back? Well, here’s your answer!   

When you die, the assets you own and debts you owe are entrusted to the executor of your estate to deal with. When it comes to your HECS loan, your executor will need to ensure your compulsory repayments are up to date until the date of your death, this may involve lodging all (if any) outstanding tax returns for this period. The rest of your HECS loan is then cancelled – which is good news for the beneficiaries of your estate! 

At the moment, the same process is followed for several other Government HELP loans, including FEE-HELP, VET FEE-HELP, OS-HELP, SA-HELP and VET Student Loan Debts. 

Now that you know what will happen to your HECS when you die, if you would like our help to get the rest of your estate planning in order, or if you need help to administer an estate, call us now on 1300 654 590

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