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In family law property proceedings, HECS debts are treated as either a joint liability (included in the property pool) or a personal liability (excluded from the property pool), depending on the circumstances.

Factors the Court considers when determining whether or not a HECS debt should be included or excluded from the property pool

1. Whether the parties jointly agreed to the studies that resulted in the HECS debt.
2. Whether the parties have jointly benefited from the qualification that gave rise to the debt i.e. did the qualification result in additional income to support the parties or family?
3. Whether repayments to the debt have been made from joint funds or from the income that the party is earning.
4. Whether both parties have a HECS debt, whether one party’s HECS debt was paid off during the relationship and if so, the reason why the other party’s HECS debt was not paid off.
5. Whether the studies have been completed at the date of separation, and if the party incurring the debt will receive the sole benefit of the qualifications post-separation.

Case law examples of how a HECS debt has been dealt with by the Court

HECS debt as a joint liability

Lane & Owen [2010] FamCA 575 – The Husband’s HECS debt had been repaid prior to separation from joint funds so the Wife’s HECS debt was found to be a joint liability.

Berry & Berry [2010] FMCAfam 542 – The Husband had agreed to the wife studying, and once she completed her studies, she gained relevant employment and became the main/sole income earner in the relationship. As a result, the wife’s HECS debt was found to be a joint liability.

Panagakos & Panagakos [2013] FamCA 463 – An 18-year marriage where the Wife studied during the relationship. It was clear that the Wife would “energetically seek out paid employment” so the Court formed the view that the debt would be repaid in the future. The Court decided to include the HECS debt in the property pool as a joint liability, however noted “What might seem like an unfairness about that will be addressed … in s 75(2)(h) or if that is read as literally limited to maintenance cases, in s 75(2)(o).”. So the HECS debt was considered in assessing future needs.

HECS debt as a personal liability 

Mullins & Birchmore [2014] FCCA 1297 – A 13-year relationship where the Husband had a HECS debt. The Wife financially supported the Husband and the children while the Husband studied. She also assisted in repaying a previous HECS debt of the Husband’s. Once he had his qualification, the husband only worked for 2.5 years in the relevant field, so the family only enjoyed increased income for a short period of time. The Husband also said he would no longer earn an income as a result of that qualification and was looking to continue his studies. His HECS debt was considered a personal liability. Repayment of the HECS debt would be dependent upon his receipt of an income.

Zimin & Nickson [2014] FCCA 206 – The Wife had not completed her studies at the time of separation and going forward she alone would benefit from completing her studies, so it was found to be a personal liability.

Partington & Cade [2008] FamCA 945 – Both parties had HECS debts of similar amounts. Neither party contributed to either debt or gained employment in a field relevant to their qualification. It also did not appear likely either would repay their HECS debt overall. As a result, each party was found to be responsible for their own HECS debt.

Thomm & Painter [2015] FCCA 1001 – A 14-year relationship where the Wife completed her studies and incurred her HECS debt during the relationship. Although she was repaying $150 a fortnight by the time of Trial, she had only commenced employment after the parties had financially separated. Overall, the HECS debt did not contribute to her earning capacity during the relationship. As such, the HECS debt was excluded from the settlement.

Murray & Murray – The Wife completed her studies during the relationship, however, she had still not completed her overall qualification (she would need to incur a further HECS debt of $27,000 to do so). The Husband contended the HECS debt should not be included in the pool because the Wife would need to earn a certain level of income before it became repayable. The Wife asserted she was entitled to reskill and only incurred the debt because she could not pay upfront. The HECS debt was excluded as it was not immediately payable and was a contingent liability. The Court noted (like Panagakos above) that HECS debts be dealt with in future needs considerations (where the Court considers the impact an order would have on the earning capacity of a party and other future needs).