Many people undertake further education as a means of increasing their earning capacity. Sometimes people have time on their hands after children are born or a redundancy from work. This raises the question whether the Court considers a HECS debt incurred during the marriage to be a joint liability of both parties.
In short, the answer is: it depends.
Even though HECS has relatively lower interest rates and conditional repayments, it is nonetheless a debt, and the Court may consider the HECS debt as a factor in determining property settlement in some circumstances.
The Family Law Act does not explicitly say how the Court should deal with HECS debt. The Court may adopt either of the following approaches:
- The debt is a personal liability and therefore excluded from the property pool; or
- The debt is considered a joint liability and therefore a part of the property pool.
In determining which approach to take, the Court will consider which approach is just and equitable in the circumstances of the case so it is seen in context with the balance of the facts the Court is asked to consider.
In the case of Berry & Berry, the Court considered the HECS debt to be a joint liability. In this case, the wife undertook her studies with the husband’s agreement, obtained work in her field immediately after she completed her studies, and became the sole income earner for the family. This demonstrated to the Court that the wife’s education provided a joint benefit to the marriage.
On the other hand, the Court determined that the HECS debt was a personal liability in the case of Zimin & Nickson. The Court took into account the circumstances in this case, including that the wife completed her tertiary education after separation and there was therefore no joint benefit from incurring the HECS debt.
Like other factors that the Court considers, the issue of HECS debt depends on the specific circumstances of the marriage. However, where there is a joint benefit to the relationship, such as allowing one person to be the sole income earner, the Court will be more likely to consider HECS debt as a joint liability.
Jordan Reichhold, Lawyer and Nguyet Cao, Client Service Manager
Caroline Counsel Family Lawyers
P: +61 3 9320 3900
The information in this blog does not constitute legal advice and cannot be relied upon by you. If you require advice specific to your situation you must contact Caroline Counsel Family Lawyers. The contents of this blog are relevant as of 10 June 2022. We recommend you obtain specific advice relevant to you and your family’s situation.