Nearly three million Australians currently owe an average of $5,500 each in HECS debts to the government, with these obligations being gradually reduced through mandatory repayments.

However, if you’ve already settled your HECS debt and neglected to inform your employer to cease wage garnishments, it’s crucial to address this promptly.

As Chapman points out, “If you end up overpaying, the funds aren’t gone for good, but you won’t see them returned until tax season arrives.”

“Once you file your tax return, the Australian Taxation Office (ATO) will reimburse the excess payments. This process, however, involves a significant wait,” he elaborated.

“Essentially, you’re providing the government with a short-term interest-free loan, which isn’t a financially sound move,” Chapman concluded.

Australian pool manager Maddie paid off her $12,000 HECS debt late last year.

She told nine.com.au the 20 per cent reduction shaved off around $2500 from her balance, meaning she could make one voluntary payment and reduce it to zero.

Maddie hasn’t told her employer about paying it off yet.

“There’s very little clear or accessible information about paying off HECS – especially about what steps to take once it’s fully cleared,” she said.

“The lack of guidance makes it confusing and easy to miss important steps.”

She expects a hefty tax return come June 30.

HECS debt repayments don’t automatically stop even if you log onto MyGov and find the balance has reached zero, Chapman said.

You need to fill out a tax form called a “withholding declaration”, which indicates to your employer that you no longer have a HECS debt.

It’s as simple as ticking the box ”no” on the form when it asks if you have a Higher Education Loan Program (HELP), VET Student Loan (VSL), Financial Supplement (FS), Student Start-up Loan (SSL) or an Australian Apprenticeship Support Loan (AASL) debt.

Once this has been lodged, your next weekly, fortnightly or monthly pay will be a little bigger.

This figure will vary depending on your salary and what your regular contributions were.

For example, anyone earning between $67,001 and $15,000 pays 15c for each dollar over $67000.

“Say you’re having $500 taken out of your salary each month to pay your HECS bill. If your HECS bill is no longer there, that $500 is paid to you in extra cash,” Chapman added.

“If you told your employer that the HECS debt is gone, that immediately puts more money into your pocket.

“If you haven’t yet, it’s not something to panic about, but you should always make sure that you do actually notify your employer as soon as possible because that just makes financial sense for you.”

If your HECS debt has reduced to a small amount, Chapman said it is important to clear it to zero before filling out the withholding declaration form.

“If it is a bigger balance, that will actually cost you in terms of additional indexation,” Chapman said.

“Your tax agent will be able to give you specific advice regarding your particular circumstances.”

Maddie said it feels like a financial burden has been lifted from her shoulders after years of compulsory payments.

“Even though I didn’t finish my degree, carrying a HECS debt of over $12,000 was something that weighed on me,” she said.

“Paying it off feels like a massive relief. I no longer feel guilty about leaving university, and mentally it feels like closing a chapter.

“Financially, it means I can focus more on travelling and future goals without the ongoing pressure of student debt hanging over me.”

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

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