Moving Overseas With a HECS Debt? It’s Coming With You (Here’s How to Handle It)

There’s a special moment in every Aussie expat’s journey. You’ve landed the overseas job, sorted the visa, sold the couch on Marketplace. And then, somewhere over the Indian Ocean, a thought floats up from the back of your mind: “Hang on… what happens to my HECS debt?”

For a long time, the answer was “nothing, you lucky devil”. For the first 26-odd years of the scheme, graduates who moved overseas could simply stop repaying. No Australian income, no repayments, no questions asked. Some expats let their debts sit untouched for decades while the same debt quietly grew through indexation.

Those days ended on 1 July 2017, and yet we still meet expats every single month who don’t know it. So consider this your friendly, slightly blunt update: your HECS debt has a passport now, and it’s been travelling with you the whole time.

The rules in plain English

If you have a HELP debt (that’s the modern name for HECS, and the same rules cover VET Student Loans and Australian Apprenticeship Support Loans), moving overseas changes nothing about whether you owe it. What changes is how the ATO collects.

Since 2017, Australians living overseas must report their worldwide income to the ATO every year. Not just Australian income. Everything: your Singapore salary, your London bonus, your Dubai package. If that worldwide income tops the repayment threshold, you make compulsory repayments, paid as an “overseas levy” if you’re a non-resident. Being a non-resident who pays no other Australian tax doesn’t get you out of it. Your student debt is the one piece of the Australian tax system that genuinely follows you everywhere.

Your two ongoing obligations (write these down)

First, the travel notification. If you intend to be overseas for 183 days or more in any 12-month period, you must update your contact details and submit an overseas travel notification to the ATO within 7 days of leaving Australia. You do this through ATO online services in myGov, or your tax agent can handle it.

Second, the annual report. Every year, by 31 October, you must report your worldwide income to the ATO, or lodge a non-lodgment advice if your income is low enough. Yes, every year, even years when you owe nothing. The reporting obligation and the repayment obligation are two different things, and plenty of expats have been stung with penalties for skipping the paperwork in years they didn’t owe a cent.

A practical tip from the trenches: sort out your myGov access before you leave Australia. If your two-factor authentication is tied to an Australian mobile number you’re about to cancel, future-you will spend hours of their new overseas life trying to get back into the system. Fix it while it’s a five-minute job.

How much will you actually repay?

Here’s where the news gets genuinely good, because the rules were overhauled from the 2025-26 year and the changes favour most expats.

The repayment threshold jumped to $67,000 of worldwide income (it was $54,435 the year before). Below that, no compulsory repayment at all.

Better still, repayments are now calculated on a marginal basis, like income tax brackets. Under the old system, crossing the threshold by one dollar triggered a repayment on your entire income, which created a brutal cliff. Now you only repay a percentage of the income above the threshold, starting at 15 cents in the dollar over $67,000 and stepping up through the brackets, until very high earners (above roughly $179,000) pay a flat 10% of their whole repayment income. Someone on $80,000 now repays a fraction of what the old rules demanded.

One trap to know: “repayment income” is broader than taxable income. It adds back things like reportable super contributions, reportable fringe benefits, net investment losses and exempt foreign employment income. So salary sacrificing or a negatively geared property won’t shrink your HELP repayment the way some pub experts claim.

The 20% haircut (check you got yours)

In 2025 the government also took the unusual step of simply cutting everyone’s student debt. If you had a HELP debt on 1 June 2025, 20% of the balance was wiped, automatically, before that year’s indexation was applied. A $30,000 debt became $24,000 overnight.

If you’re overseas and haven’t looked at your loan account since the Turnbull government, log in to myGov and check the reduction landed. While you’re there, note that your debt still gets indexed every 1 June, so it grows each year you make no repayments. The indexation formula was also softened recently (it’s now tied to the lower of inflation and wage growth), but softer growth is still growth. A debt ignored for ten years overseas does not stay the same size.

What happens if you just… don’t?

The honour system this is not. The ATO data-matches arrival and departure records with its loan book, and the Common Reporting Standard means your overseas financial footprint is more visible to them than ever. Skip the reporting and you’re exposed to failure-to-lodge penalties (currently $330 per 28 days late, up to $1,650 per overdue report) plus interest, and an unpaid, untended debt quietly compounding in the background the whole time.

And remember: this debt waits for you. Come home in fifteen years and it’ll be sitting there, indexed and patient, ready to chew into your first Australian payslip. There is no statute of limitations on HECS. The only exit doors are repaying it or, morbidly, dying (the remaining debt is generally cancelled then, which is the single worst repayment strategy I can think of).

Should you pay it off faster from overseas?

You can make voluntary repayments from anywhere in the world at any time, and for some expats it makes sense, particularly getting a payment in just before 1 June to beat indexation. But don’t rush to torch your savings out of guilt. HELP debt is among the cheapest debt you’ll ever hold: no interest, just indexation. If you’re carrying a credit card balance or a personal loan, those get fed first, every time. And money invested sensibly over a decade will often outrun indexation comfortably. Run the numbers for your situation, ideally with someone who can see your whole financial picture across both countries.

The bottom line

Your HECS debt didn’t stay at the airport. Since 2017 it travels with you, and the deal is simple: notify the ATO when you leave, report your worldwide income by 31 October every year, and repay when your income clears $67,000. The recent reforms (higher threshold, marginal repayments, the 20% cut) have made the whole arrangement far friendlier than it used to be. The paperwork, however, remains stubbornly compulsory.

For the wider picture of what’s changing for expats, including proposed measures in the latest federal budget, see our guide: Australian Expat Tax Changes – 2026 Budget Guide for Expats. And if you’re not sure about your broader lodgment obligations, start here: Do I need to lodge a tax return while living overseas?

Tread your own path. The debt collector already knows the route.

Five years behind on your worldwide income reporting? Let’s fix that quietly.

If you’ve just discovered these rules exist, you’re in good company, and you’re fixable. We bring expats up to date with their HELP reporting all the time: the overdue declarations, the travel notification, the lot, and we’ll tell you honestly whether you actually owe anything (often the answer is less than feared). Coming forward voluntarily puts you in the strongest possible position with the ATO. Waiting for their letter does the opposite.

Book an appointment with our expat tax specialists today and get your HELP obligations sorted before the next 31 October deadline. Your future self (and your hip pocket) will thank you.

General information only. This article doesn’t consider your personal circumstances and isn’t tax or financial advice. Speak to our specialist expatriate tax team today, or with another registered tax agent, before acting.

References

1. Australian Taxation Office, “Overseas obligations when repaying loans” (the 7-day overseas travel notification, annual worldwide income reporting and the 31 October deadline): ato.gov.au
2. Study Assist (Australian Government), “Moving overseas” (HELP repayment obligations based on worldwide income while living abroad): studyassist.gov.au
3. Australian Taxation Office, “When you must repay your loan” (repayment thresholds and how compulsory repayments are calculated): ato.gov.au
4. Australian Taxation Office, “Penalty units” (failure to lodge penalty amounts): ato.gov.au
5. Higher Education Legislation Amendment (20% Reduction of HELP Debts) Act 2025 (the one-off 20% reduction of HELP debt balances and 2025-26 repayment reforms).