What happens to your HECS debt when you separate?
27 August 2023
Author: Phoebe Smillie - Our People
HECS/HELP debts have become topical recently with high inflation causing HECS/HELP debts to rise by 7.1% in June 2023. With rising levels of debt together with more and more people pursuing tertiary education, we are starting to see people ask us whether HECS/HELP debts are considered in a family law property settlement.
How are HECS/HELP debts treated in family law matters?
A HECS/HELP debt will be treated to similar liabilities incurred by a party or parties in a relationship. A HECS/HELP debt will be treated by the Court as either:
- A joint liability and to be included in the joint pool of assets/liabilities available for division; or
- A personal liability attributable to one party of the relationship and therefore excluded in the joint pool of assets/liabilities.
What factors does the Court consider?
When determining who will be liable for a HECS/HELP debt, the Court will always look to the individual circumstances of the matter. However, usually, the Court will consider the following:
- How the debt was incurred. In other words, whether the parties jointly agreed to the studies that resulted in the HECS/HELP debt.
- Whether the parties have jointly benefited from the qualification that gave rise to the debt. For example, did the party use their qualification that gave rise to the debt to earn an income which was used to support the family/parties?
- Whether repayments have been made towards the debt either through the income that the party is earning, or from joint matrimonial funds.
- Whether both parties had a HECS/HELP. For example, was one party’s HECS/HELP debt paid off during the relationship and if so, why was the other party’s HECS/HELP not repaid.
- Whether the studies have been completed at the date of separation. In other words, is the party who is incurring the HECS/HELP debt going to receive the sole benefit of the qualification ultimately gained post-separation?
When has the Court found that a HECS/HELP debt was a joint liability?
In the matter of Berry & Berry  the Court found that the Wife’s HECS debt was a joint liability in circumstances where:
- The parties had agreed for her to undertake tertiary education;
- Immediately following her graduation, the Wife obtained employment in her field of study; and
- Thereafter, the Wife was the sole income earner in the family.
- In the matter of Lane & Owen  FamCA 575, the Court found the Wife’s HECS debt was a joint liability given the Husband’s HECS debt was fully repaid using joint matrimonial funds throughout the course of the relationship.
When has the Court found that a HECS/HELP debt was a personal liability?
- In the matter of Partington & Cade  both the Husband and Wife had similar levels of HECS debts and there had been no repayments made to the HECS debt from joint funds. Neither the Husband nor the Wife were employed in their professional fields. Ultimately, the Court found each party should remain liable for their respective HECS debts.
- In the matter of Zimin & Nickson  FCCA the Court found the Wife should be personally liable for her HECS debts in circumstances where she completed her university studies following separation. It was found, there would not be a joint benefit from the HECS debt.
- In the matter of Thomm & Painter  FCCA the Court found the Wife’s HECS debt did not contribute to her earning capacity during the relationship, and she only commenced such employment following separation. As such, the Court held that the Wife’s HECS debt of $13,229 should be excluded from the settlement.
A HECS/HELP debt can be a significant liability (particularly in the context of small or modest asset pools) so it is important to obtain legal advice as to who will be liable for the debt in the event of a separation. Our family lawyers are highly experienced in all aspects of family law property settlements and can assist you with your property settlement. Please contact a member of our family law team to discuss your options.