HECS Debt in Divorce: Property Settlement Guide (2026)

In a HECS debt divorce, the debt itself never moves: the Australian Taxation Office keeps collecting it from the person who studied, through their tax file number. What can change is the property settlement. Depending on the circumstances, the court may count the balance as a joint liability in the property pool or treat it as personal to the borrower.

This page is general information, not legal or financial advice. Below we set out what the tax system does, what family lawyers say courts weigh, why a HECS-HELP balance is rarely worth its face value, and the dates and documents worth having in hand before you negotiate. For advice on your own situation, speak to an independent family lawyer.

HECS debt divorce rules: the short answer

There are two separate systems at work, and most of the confusion comes from mixing them up.

• The tax system. A HELP debt (HECS-HELP, FEE-HELP and the other loans under the Higher Education Loan Program) is created under the Higher Education Support Act 2003 and is linked to the individual borrower through their tax file number, according to Study Assist. The Australian Taxation Office collects it through that person's tax return. Nothing in a separation changes whose debt it is in the ATO's records.
• The family law system. When separating couples divide property under the Family Law Act 1975, the court looks at the assets and liabilities of the parties, individually and jointly. The Federal Circuit and Family Court of Australia states plainly that there is no formula for dividing property; the aim is an outcome that is just and equitable on the facts.

So the short answer to "is HECS split in a divorce?" is that the debt is not split, but its value may be taken into account when the rest of the property is divided. Whether it is, and how much weight it gets, depends on the circumstances. No official source we could find sets a fixed rule for HELP debts specifically. What you can pin down is the borrower's likely repayments: our HECS repayment calculator shows them at any income, which is useful when you are weighing what the balance is really worth.

What the ATO does vs what the family court may do

The debt stays on your tax file number

Study Assist explains that a HELP debt is linked to the individual through their tax file number. It says this when answering whether anyone inherits a HELP debt (they don't; the remaining balance is cancelled on death), so it is a statement about how the loan is held rather than a rule written for divorce. Still, the practical effect is the same: the ATO has no mechanism to move a balance onto a former spouse or de facto partner, and a court order between the two of you does not change the borrower recorded against the loan. Compulsory repayments keep coming out of the borrower's tax assessment once their repayment income is high enough.

Why a court can still take it into account

A property settlement is about the overall financial picture of both people. The Federal Circuit and Family Court of Australia says it considers each party's assets and liabilities, their contributions, and their future needs, under section 79 of the Family Law Act 1975 for married couples and section 90SM for a de facto relationship. A HELP balance is a liability of one party, so it can be part of that picture even though the ATO will only ever collect it from the borrower.

If you are still together and want to understand how a partner's study loan interacts with shared money in day-to-day life, see our guide on how a partner's HECS debt affects joint finances. This page deals with what happens once the relationship has ended.

When HECS is treated as a joint liability vs a personal one

Factors family lawyers say courts weigh

Because the Family Law Act 1975 does not single out study loans, the treatment of a HELP balance comes down to the facts. Family lawyers at Meillon & Bright (writing in May 2026) describe no single rule: a HECS debt may be included in the property pool as a liability of the relationship, or treated as personal to the partner who studied. They list factors that tend to push one way or the other. Their article cites no cases, so treat these as practitioner observations rather than settled law:

• When the debt was incurred, and whether both partners agreed to the study. Study undertaken during the relationship as a shared plan points toward joint treatment; a debt brought into the relationship points the other way.
• Whether the other partner's HECS was repaid during the relationship. If joint money cleared one partner's loan, fairness arguments can arise about the remaining one.
• Whether the debt is current or contingent. In other words, how likely the borrower is to earn above the repayment threshold and actually repay it (covered in the next section).
• Whether the qualification produced income that supported both partners. A degree that lifted household income during the relationship can support joint treatment.
• Whether the course was finished. An unfinished course at separation, which has not yet produced any benefit to the relationship, points toward personal treatment.

Future needs: when an excluded debt still matters

Even if a HECS balance is left out of the property pool, it does not disappear from the analysis. The court's own guidance says it considers each party's future needs, which can take in things such as age, health, financial resources and ability to earn an income. A borrower who will be paying compulsory repayments for years on a modest salary is in a different position from one whose debt is small or whose income is well below the threshold. That is why the same balance can carry different weight in two otherwise similar separations.

What you should not expect is a percentage rule. Anyone quoting a standard split for HECS debts in a property settlement is going beyond what the court or the published guidance says.

Why a HECS balance isn't worth its face value

A credit card balance is a fixed liability: it must be repaid on set terms whatever you earn. A HELP balance works differently. Repayment depends entirely on the borrower's repayment income, so the "real" cost of the debt can range from nothing in a given year to a substantial slice of salary. This is what family lawyers mean when they describe a HELP debt as contingent.

No repayment below $69,528 in 2026-27

According to the ATO's published rates, a borrower whose repayment income is $69,528 or less in 2026-27 makes no compulsory repayment. Above that, the system has used marginal rates since 2025-26, so the percentage applies only to income above the minimum repayment income rather than to the whole amount:

• $69,529 to $129,717: 15 cents for every $1 over $69,528
• $129,718 to $186,050: $9,028 plus 17 cents for every $1 over $129,717
• $186,051 and above: 10% of total repayment income

For comparison, the 2025-26 minimum repayment income was $67,000. Repayment income is not just salary: the ATO adds reportable fringe benefits, total net investment loss, reportable super contributions and exempt foreign employment income to taxable income. After a separation, income patterns often change (a move to part-time work, a new role, selling an investment property), so it is worth recalculating rather than assuming last year's figure. The calculator linked above lets you model compulsory repayments at your post-separation income before you sit down to negotiate.

Worked repayments at different incomes

The table below uses the ATO's 2026-27 repayment table. Two rows are the ATO's own worked examples; the other two are our arithmetic using the same rates, shown so you can check them.

Picture two people with identical HELP balances. One earning $60,000 repays nothing this year, while the balance is still indexed. The other earning $137,064 has more than $10,000 withheld or assessed in a single year. A property settlement that ignores this difference can produce an uneven result, which is why the "current versus contingent" question matters. For a fuller walk-through of the mechanics, see how compulsory repayments are worked out.

Dating the balance: indexation and the 20% cut

Settlement negotiations often take months, and a HELP balance moves during that time. Two recent changes affect which figure you should use.

Indexation. Study Assist confirmed that indexation of 2.8% was applied on 1 June 2026, the lowest rate since 2021. It applies to the part of the debt that has been unpaid for more than 11 months. Borrowers who wanted to reduce their balance before indexation had to make a voluntary repayment by 26 May 2026. A balance taken from a statement before 1 June 2026 is therefore likely to be lower than the current figure.

The 20% reduction. The ATO has completed processing the one-off 20% reduction applied to study and training support debts that existed on 1 June 2025. Processing began in December 2025, and accounts that went into credit may have received refunds. A balance quoted from before the reduction was processed can overstate the current debt by a wide margin.

In practice, agree on a date for valuing the debt and pull a current statement from ATO online services through myGov rather than relying on figures from an old tax return or a screenshot taken a year ago.

Paying off an ex-partner's HECS as part of a settlement

Sometimes the parties agree that one of them will pay down the other's study loan, for example in exchange for keeping a larger share of other property. That is possible, but only in one way: as a voluntary repayment made to the ATO on the borrower's account. Before agreeing to it, understand what the ATO says about voluntary repayments:

• They are not tax deductible. This applies whether you pay your own debt or someone other than your employer pays it for you.
• They are not refundable. Once the money is applied to the HELP account it stays there, even if circumstances change later.
• The debt remains the borrower's. The payer gets no rights over the loan, and any unpaid remainder is still collected from the borrower.

Because the HELP debt is contingent, a dollar used to repay it may be "worth" less than a dollar of cash or equity if the borrower would never have reached the repayment threshold. That trade-off is one reason to get advice before agreeing to clear an ex-partner's balance in a set of consent orders or a financial agreement.

Time limits for property settlement

The Federal Circuit and Family Court of Australia sets strict time limits for property applications. If you were married, you must apply within 12 months of your divorce order becoming final. If you were in a de facto relationship, the limit is 2 years from the date the relationship broke down. You can apply before a divorce is final. Applying out of time needs the court's permission, which is not always granted. Consent orders, where both parties agree on terms and ask the court to formalise them, are a common way to finalise matters within these windows.

The court's own page is the best starting point for the legal framework: read the Federal Circuit and Family Court guidance on financial and property matters. It also links to the Attorney-General's Department guide on separating with debt.

Documents to gather before you negotiate

Whichever way the HELP balance ends up being treated, both parties and their lawyers will want accurate numbers. A short checklist:

• A current HELP balance from ATO online services in myGov, ideally dated close to the settlement date, showing indexation and the 20% reduction.
• Loan history showing when each debt was incurred, which helps answer whether the study happened before or during the relationship.
• Recent notices of assessment showing repayment income and any compulsory repayment raised in past years.
• Records of voluntary repayments made during the relationship, especially if joint funds were used.
• Course records showing whether the qualification was completed and when.
• Current income evidence (payslips, employment contract) so future repayments can be estimated at post-separation income.

With those in hand, run the borrower's expected income through the calculator, compare the result with the face value of the debt, and take both figures to your lawyer. That turns a vague "there's also my HECS" into a number everyone can work with.

Sources: Study Assist (loan repayments; 2026 indexation notice), Australian Taxation Office (2026-27 repayment rates; voluntary repayments; study loan account), Federal Circuit and Family Court of Australia (property and finances overview), Meillon & Bright (May 2026). Figures checked 18 October 2026. General information only; not legal or financial advice.

This article is general information, not financial, tax or legal advice. Figures are approximate and change over time — always verify with a qualified professional or the official source before making a decision.

Written and reviewed by the HECS Debt Calculator editorial team. Facts checked against primary sources; see the reference above.

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