With approximately 1.4 million adult local and international students attending university each year in Australia, it is no surprise that HECS debts are often contentious topic when dividing Family Law assets.
Our Brisbane Property Settlement Lawyers are faced with the question of whether the HECS debt is to be included in property settlement matters.
The Unique Nature Of A Hecs Debt In Australian Family Law:
HECS debts are somewhat unique from other debts in the circumstances of separation and divorce, as there is no obligation to repay the debt if a party currently earns below the annual income threshold ($51,550 for the 2023/2024 financial year).
Another distinctive feature that particularly arises in Family Law matters is that the party with the HECS debt may have a greater future earning capacity due to completing their studies during the relationship.
The Courts are often responsible for determining how HECS debts are treated when a marriage or de facto relationship has broken down.
Let’s look at some recent court cases and their final decisions.
Recent Family Court Decisions Concerning Hecs Debts:
In Zimin & Nickson [2014] FCCA 206, the Court noted the time the wife completed her studies when determining that the HECS debt would be excluded from the property pool and would remain a personal liability maintained by the wife. The wife had yet to complete her studies at the time of separation, and the Court found that the income she would derive from her studies would be for her sole benefit.
In Thomm & Painter [2015] FCCA 100, the wife had completed her studies during the relationship and had a HECS debt at trial; however, the wife’s income did not meet the threshold for the wife to repay the debt from her fortnightly income. The Court stated that the HECS debt did not contribute to the wife’s earning capacity before the parties’ financial separation. Accordingly, the HECS debt was excluded from the property pool.
In Lane & Owen [2010] FamCA 575, the wife’s HECS debt was included in the property pool, and the Court considered the fact that the husband’s HECS debt had been repaid before separation using joint funds. The Court took the approach that given that the Husband’s HECS debt was repaid from joint funds, the wife should have the same benefit.
Unfortunately, there is no clear-cut answer to whether a HECS debt will be included or excluded from a Family Law property settlement, and the Court considers each case based on its circumstances.
However, the court uses some critical factors in determining HECS debt in separation and divorce matters.
Factors Used By Courts In Determining A Hecs Debt:
- Whether or not studies were completed during financial separation.
- What benefit did the joint parties receive from the studies undertaken during the relationship? The most common example is a party earning an income using the skills obtained through their studies, financially supporting both parties.
- Whether or not the HECS debt is likely to be paid in consideration of the party’s current income and their future potential earning capacity.
- Whether or not the party is currently utilising their studies through employment and whether they are likely to use the skills obtained from their tertiary education.
- If additional payments were made towards the HECS debt by either party beyond the mandatory repayments from the party’s income.
Our experienced Brisbane Property Settlement Lawyers can provide you with expert legal advice tailored to your specific circumstance and guide you through your property settlement.
How Can Simonidis Steel Brisbane Property Settlement Lawyers help you?
When facing a property settlement, it is not easy to navigate through the many questions that arise when determining HECS debts and other important issues relating to property.
If you are undergoing separation in Brisbane and have questions about HECS debts or any other family law-related matters, our Brisbane Leading Property Settlement Lawyers are here to help.
To book a fixed fee initial consultation or speak with our Brisbane Property Settlement Lawyers, contact Simonidis Steel Lawyer, today at (07) 3229 3339.
