Introduction

In family law property matters, HECS debts may be classified either as a shared liability (and therefore included in the asset pool) or as an individual obligation (and excluded), depending on the specific facts of the case.

When deciding whether a HECS debt should form part of the property pool, the Court may take into account factors such as:

  • Whether both parties supported or agreed to the course of study that led to the debt.
  • Whether repayments have been made using joint finances or solely from the income of the person who incurred the debt.
  • Whether the qualification obtained has provided a financial advantage to both parties, for example by increasing income used to support the household or family.

Case examples

Each case addresses the three above-mentioned factors in turn:

In Berry & Berry [2010] FMCAfam 542, the husband had agreed with the wife for her to pursue her studies, as a result of which she gained employment. She became the primary income earner for the family thereafter.

As Federal Magistrate Mead provides at [21]:

I find that the wife undertook the [omitted] studies by agreement with the husband during a time that the husband continued with his own studies. I am satisfied that immediately following upon the completion of those studies, the wife obtained employment commensurate with her new tertiary qualifications, and that thereafter for the remainder of the period of cohabitation she was the primary, and indeed almost the sole income earner for the family.

Further, in Lane v Owen [2010] FamCA 575, as the husband’s tuition fees was fully paid using joint matrimonial funds throughout the course of the relationship, the wife’s HECS debt was deemed a joint liability.

As Registrar Loughnan states at [166]:

… The wife notes that the husband’s university fees were paid from matrimonial funds whereas she has accrued a HECS liability. However, the wife’s HECS debt is included in the list of liabilities. Therefore it too is being met from joint funds.  

By contrast, in Thomm v Painter [2015] FCCA 1001, the separation had occurred before the wife’s HECS debt could have any meaningful effect on her earning capacity, such that the HECS debt was not regarded as a joint liability.

As Judge Newbrun explains at [87]:

The HECS debt did not contribute to the wife’s earning capacity before the parties’ financial separation at the end of March 2012 and, accordingly, the HECS debt will not go into the balance sheet.

A HECS/HELP debt can be a significant liability so it is important to obtain legal advice a to who will be liable for the debt in the event of a separation.

DISCLAIMER: The information provided above is published for general informational purposes only and is not intended to be nor should it be relied upon as a substitute for legal or other advice.