Aussies overpaying education loans
- From: National Features
- November 12, 2012
AUSTRALIANS are overpaying their higher education loans without even realising it.
Figures in the Australian Taxation Office's latest annual report found $1.8 million was refunded in 2010-11 to people who had already paid off their university debts.
An ATO spokesman says reasons people overpay these debts include:
* Paying the full balance of their account but not considering the 5 per cent bonus when making lump sum payments.
* Using a payment reference number relating to their HELP account but it belongs to a different ATO account.
* Paying the debt off in full but the amount has been revised by the university.
* Prepaying a future debt but the person doesn't attend.
In January this year, the Federal Government reduced the voluntary lump-sum repayment bonus from 10 per cent to 5 per cent for repayments of $500 or more.
AMP financial planner Dianne Charman says regardless of what type of debt you have, you should always manage it and know when you have paid it off.
"The HELP debt is written on your pay slip, so if you get your pay slip electronically for example, maybe you don't even look at it," she says.
"You may not notice this, whereas with our home loan statements and personal statements, it's on our internet banking and you do watch it."
Your payer withholds pay as you go (PAYG) amounts, including HELP debt repayments, if you have one.
These repayments are taken from a person's wage once they are earning at least $49,096 a year. The rate starts at 4 per cent of the taxable income and increases as income rises.