HECS debt and death.

[moyjos]

My 50 something sister in law has just enrolled in an Arts degree that she has absolutely no intention of using for anything else than her own self education.

Now I have no problem with that at all, except that I have just found out she is eligible for a HECS ( I think it is HELP now?). I asked if that meant she had changed her retirement plans (to pay the HECS debt) and she laughed and said. "No way..so I will die with a HECS debt. They don't take it from your estate.

Is this really true? Why the heck are we paying taxpayer dollars that will NEVER be recovered? Surely this sort of thing is what drives up Uni Course fees.

 

[vtt]

She is sort of correct. Once you reach a certain income threshold you have to repay a percentage of your income (I think it's up to 8%) as FEE-HELP.

On the death of someone with a FEE-HELP debt, the trustee or executor has to complete the final tax return for the deceased, the FEE-HELP percentage is taken from that amount (assuming they reach the threshold) and any remaining balance is waived.

So, this means if whilst alive she does not ever reach the threshold to start repaying and then dies, her debt will not be repaid and will be waived.

It's not actually the universities that manage the fees though, it's the ATO so ultimately it's the taxpayer that pays for people that use the system in the same way as your S-I-L.

vtt

 

[Terry_w]

Yes it is true.

HECS will be payable on the date of death tax return but not thereafter. i.e. the estate is not further liable.

 

[Nemo30]

and then you have the people who leave the country and have no intention of paying it back.

 

[Terry_w]

and then you have the people who leave the country and have no intention of paying it back.

The government is supposedly going to tax those people - not sure how.

 

[moyjos]

The government is supposedly going to tax those people - not sure how.

My daughter studied in NZ and had student loans that had to be repaid regardless of where she lived. Not sure how they policed it though.

 

[hugh72]

My daughter studied in NZ and had student loans that had to be repaid regardless of where she lived. Not sure how they policed it though.

That's interesting I know a few people who went to uni or varsity in NZ as they call it in the early 90s and came here without repaying their student loans and have no intention to.

 

[moyjos]

That's interesting I know a few people who went to uni or varsity in NZ as they call it in the early 90s and came here without repaying their student loans and have no intention to.

Daughter sent this link. http://www.ird.govt.nz/studentloans/overseas/long-trip/?id=201406slfree

 

[Terry_w]

This is interesting

Failing to make repayments while overseas

If you're significantly behind on your repayment obligation and you haven't talked to us recently about your loan repayments, you may be stopped from leaving New Zealand next time you come home for a visit.

If you are uncertain or concerned that this may apply to you, you should contact us as soon as possible. We can work with you to arrange a repayment plan that will suit your situation and get you back on track with your loan.

 

[moyjos]

This is interesting

Doesn't the ATO have similar powers at our borders, so you don't skip out on "significant" tax debt?

 

[Scott No Mates]

Doesn't the ATO have similar powers at our borders, so you don't skip out on "significant" tax debt?

They get you at your bedside before you leave this world?

 

[Terry_w]

Doesn't the ATO have similar powers at our borders, so you don't skip out on "significant" tax debt?

Its not due and payable until you reach an income threshold.

 

[redwing]

It's snowballing

HECS projected to hit $42bn

Budget papers predict that students will owe the government $42.1 billion by the end of the forward estimates in 2016-17. Last year?s projection, for 2015-16, was $30.6bn.

HECS architect Bruce Chapman said there were relatively easy ways to boost repayments, such as collecting them from graduates living overseas ? a measure he estimated would recover at least $30 million a year.

 

[MarkB]

It's snowballing

HECS projected to hit $42bn

This is what happens when too many people go to university - but I don't blame the students, the system is broken (it dates back to the time of the Dawkins reforms).

My understanding is that most of the debt that is unlikely to ever be recovered is simply because people won't reach the repayment thresholds (which strongly suggests an oversupply of grads).