HECS Refund: What You Need to Know

Written by Daniel Dubois & Shara Cox

The Australian Government's announcement of study loan refunds has caused a stir among those who have fully repaid their student loans. The study loan refund initiative allows eligible borrowers to claim a refund on their fully repaid loans.

How to Claim Study Loan Refunds

It’s important former students have proper documentation to submit their application.  In order to claim the refund, borrowers must provide proof of full repayment.  Where you need assistance, Salt Financial can support clients to track their student loan repayment history and verify eligibility. The refund process will vary depending on the government’s specific requirements for the year, so keeping up to date on any changes is critical.

The refunds will apply only to the indexation that occurred during 2023 and 2024. If your study loan account is in credit after the adjustment (from amounts paid during 2023 and 2024), this credit will be transferred to your Income Tax account. It will then be applied against other primary tax or Commonwealth debts (if applicable), and any remaining amount refunded to your nominated bank account. Most people will see these credits on their accounts by the end of January 2025. Some credits will take a bit longer than others to show on their accounts, depending on the complexity.

Tax Implications of Study Loan Refunds

Receiving a study loan refund might also have tax consequences. Generally, the refund will not be considered taxable income, however where any study loan principal payments or interest were treated as a tax deduction, the repayment may be considered assessable income.  Be sure to have assessed this .

Financial Planning After the Refund

Once the study loan refund is processed, you can use the funds to assist with various financial goals. Individual circumstances will vary however generally it would be worth considering first using the refund to pay down any high-interest / non deductible debt. Beyond there it may be worth considering financial advice to incorporate this refund into your long-term financial strategy.

The study loan refund offers a significant opportunity to reduce financial burdens at that pivotal early stage of your financial life. Please get in touch if Salt Financial Group can assist you further with any aspect of this.