How is HECS/HELP debt treated in a property pool?

With the increasing cost of tertiary education, it is increasingly common to see property pools with significant HECS or HELP debt balances.  Naturally, a common query is whether those debts will be included in the property pool or whether the party who accrued the debt (and is the beneficiary of the education) will bear the full liability. The answer is, as is often the case when dealing with a discretionary Court, it depends.  

When considering whether a HECS/HELP debt will be considered a joint liability, the Court will consider the following factors:

  1. Whether the HECS debt was accrued during the relationship and whether undertaking the study was a decision made jointly; 

  1. Whether the debt is a current or contingent liability; 

  1. Where the debt is a contingent liability, how likely is the party responsible for the debt to earn over the repayment threshold and make repayments on the debt (or is it likely to stay a contingent liability); 

  1. Whether the party who has accrued the debt has used the education to earn their income and has that income benefitted the parties jointly; and  

  1. Whether the other party has or had a HECS debt and whether repayments to that debt have been made during the relationship. 

Where the Court has included the HECS/HELP debt  

Chow & Harris and Anor [2010] FamCA 366 

  • Relationship of 16 years duration from 1992 to 2008.  
  • HECS debt of $35,712 at trial, incurred by the wife between the years 2005 and 2008. 
  • HECS debt included in the pool as a joint liability on the basis that the debt was wholly accumulated during the relationship.  

Her Honour, in considering any adjustment to be made to either party under section 75(2) of the Family Law Act 1975  (“future needs factors”), made note that the wife would leave the relationship with the benefit of not only the education and future earning potential, but also the HECS debt having been paid off. Her Honour, due to factors also unrelated to the HECS debt, ultimately made an adjustment in the husband’s favour of 5% for future needs.   

Berry & Berry [2010] FMCAfam 542  

  • Relationship of eight years duration from 2000 to 2008.  
  • HECS debt of $13,796 at separation, incurred by the wife during the relationship. 
  • HECS debt included  in the pool on the basis that the wife had undertaken further study by agreement with the husband and upon completion of those studies the wife then obtained employment in her field of study and was thereafter the primary income earner. 

Where the Court has not included the HECS/HELP debt  

Halsbury & Halsbury (No. 2) [2007] FamCA 1101 

  • Relationship of 9 years duration from 1995 to 2004. 
  • Wife completed a Bachelor Degree in Education between 2001 and 2004. 
  • HECS debt of $10,000 at trial.  
  • Husband asserted that it was within weeks of the wife handing in her final assignment that separation occurred and throughout the relationship the wife had had the benefit of his support as home maker and parent while completing her studies.  
  • At the time of final hearing, the HECS debt was a contingent liability as the wife was yet to earn enough to have any payments deducted from her salary. 
  • His Honour exercised his discretion to not include the HECS liability in circumstances where the wife will have the sole benefit of the future potential for higher income.   

Thomm & Painter [2015] FCCA 1001 

  • Relationship of 14 years duration from 1997 to 2011.  
  • Wife began studying in 2009 and completed her degree shortly after separation, making payments toward her HECS of $150 per fortnight.  
  • HECS debt of $13,229 at trial.   
  • His Honour exercised his discretion to not include the HECS liability in circumstances where the HECS debt did not contribute to the wife’s earning capacity before the parties’ separation.  

As is demonstrated in the above case law examples, whether a HELP debt will be considered a joint liability could turn on many factors and it is ultimately a discretionary issue to be decided on the facts of any one particular case.  

If you are currently going through a separation and unsure of how your or your former partner’s HELP debt will be treated, we recommend seeking tailored legal advice.