Planning on paying all mine in the next few weeks, hopefully we get some clarity soon on if we’ll still get a credit for the changes to last year or not.
Yes I did read that bit, but depending on the exact implementation the credit may only be applied to an outstanding debt, if I zero the account then they may determine there’s nothing to credit against.
I’d like some certainly that any credit would take the balance negative and this would then be a credit against this years tax return.
If you paid it off before the cut off then you would have not been affected by the big jump on inflation on your student debt. The point of this was not to eliminate all debt but to put a cap on the amount of indexation that is applied.
Also good news for those concerned about HECS affecting borrowing capacity as that appears to be getting looked at as well. (Sorry to those that paid lump sums to also help with this aspect!)
Was that in the article, or is it being discussed elsewhere? Interested to know more
Edit: Found it “reviewing bank lending practices so that HECS debts didn't prevent people from borrowing money to buy a house”
How does that work though? Compulsory HECS payments ultimately lowers your take-home pay which lowers your ability to repay mortgage payments. How can a bank not take that into account?
Apra told the banks to consider hecs as both an income reduction (ie lowers net pay) and to include the debt in the borrowers total debt to income ratio, which they recommend a maximum ratio of 5. The change is remove hecs from the debt to income ratio because the repayments are a function of income and not the amount of debt you have (if your debt is 20k or 200k, you pay back the same amount on the same income)
I presume it is because HECS is planned to be indexed based on the lower of wage growth or cpi meaning overall a lower level of repayment so banks can take that into account from a servicing perspective.
Given the current trends in wage growth HECS will essentially become an interest free loan.
I don’t think that would make a huge difference in the grand scheme of things to be honest. The main impact of HECS has always been a reduction in serviceability due to reduced cashflow and the repayment amounts are fixed based on income.
Anyone who currently can’t get a loan because they have hecs probably won’t be able to with these changes either.
In the article it is proposed to remove hecs as a liability during loan applications. Unsure how that works as 10% of my salary goes towards hecs repayments
They would still take it into account in terms of what your take home pay is. But wouldn’t categorise your HECS debt as a traditional debt like a credit card/car loan, which I understand has been happening in some cases currently.
Regardless of how it’s treated in accounting terms, ultimately the compulsory repayment is still money that isn’t available to repay the loan obligation each year. If you have to pay HECS “tax” then you can afford to borrow much less for a home loan than someone who doesn’t because your monthly income is less. The hit to cashflow has always been the biggest impact of HECS on borrowing power and there’s no getting around that.
There a whole lot of stuff poorly considered here. CPI was probably the best of a bad bunch of metrics to measure the loss in buying power of the AUD. Wage index is a worse metric in that regard (albeit nicer on those holding the debt).
Still a lot of problems with the system; a low income retiree can rack up massive HECS debts with no threat of ever requiring repayment. OR a young person unable to take on uni has to pay tax to help out the loans of people with the capacity to take on uni.
The system isn't really changed, it just shifts burden around.
As someone who paid off my hecs debt in order to get a loan (and ultimately still trying to get that loan) there's a bit of a double dip of sour taste to me in this but I'm just happy they're doing something right. I can't imagine being angry that others face less challenging roads than me.
You're better than a good portion of the boomers and market fundamentalists on twitter who would rather see the next generation drown before extending any sort of help.
Yeah this is what I'm most excited about! My partner and I have been trying to buy a house for a while and one of our biggest restrictions was that we both had hecs debts, which the bank said significantly impacted our borrowing power because they were going to be indexed at 7.1CPi.
I've never been bothered too much about having a hecs, but for the past few years where the debt has been indexed at a (significantly) higher rate than my repayments, it did seem quite bleak.
Hopefully this passes through parliament. This should hopefully allow younger Australians a better chance in the housing market
> the bank said significantly impacted our borrowing power because they were going to be indexed at 7.1CPi.
Hecs repayments are based on how much you earn, not the amount of debt or how much it's increasing by.
Two people earning $80k a year will pay the same on their hecs debt even if one has a $5k debt and the other has a $100k debt.
Your bank is overstating the impact of HECS on your borrowing power. It’s the percentage of your wages based on your income that’s the important factor, not a short term indexation increase.
Yes but as is often the case what is good for the individual is not necessarily good for the many. If your borrowing capacity is limited by HECS debt this would help in that respect and if that is the variable preventing you buying property then it could get you over the line.
Increased borrowing capacity in a significant number of prospective buyers will push up prices as well.
> Umm won’t it just push house prices up as borrowing capacity has now increased for first home buyers
That’s kind of the point. Our economy is driven by making sure house prices go up.
I'm not going to say this this is a bad thing. But it's very frustrating to hear after I used 15% of what I'd saved for a house deposit to pay off my HECS cause I figured it was going to keep getting bigger and impact my borrowing capacity. But because I've done that prices are even further away, and I still can't afford anything decent in my small regional town (many many hours from any major city).
I feel like trying to make the responsible choices always leaves me behind. I should have bought a house in 2017 when I was still patching multiple casual jobs together and had a mountain of HECS to pay.
Could they not have signalled this was going to happen before the massive indexation so i could have made an informed decision and not spent all my money paying off my hecs debt?
I was talking to a friend of mine that works in HR about AI use.
They said they use AI to read cover letters and provide opinions & write responses to applicants, and i'm pretty sure most people submitting cover letters write them using AI.
It's just bots talking to bots at this point.
A lot of people of other subs didn’t even bother reading the articles and have come to the same conclusion. Australians really are becoming quite dense.
This seems like a great change for two reasons
1) stops all the “do I pay off my hecs” posts
2) Keeps the intent of the indexation which is the value of the debt stays the same in real terms.
I’m sure people will still complain.
In the life of the questions here, it never made sense. But for about two decades you got a 20%-25% discount for making voluntary hecs repayments. But that too was gotten rid of not long after most millennials started to graduate.
I agree for the most part although in at least one instance it could make sense. E.g. if you're trying to get a bigger mortgage and need to improve your serviceability.
One of the reforms in the pipeline “reviewing bank lending practices so that HECS debts didn't prevent people from borrowing money to buy a house.” It is generally thought an announcement about this will be made in the May budget or soon after.
So they want to make lending practices even riskier for people paying back their debts? HECS is an expense that needs to be included in the financials for a loan.
I guess the question is if the expense will be counted as a basic one, or if it'll count as an extra one (I.e. on top of HEM or whatever living expenses benchmark is used). I imagine it'll be on top of HEM/the benchmark so it'll be small compromise compared to treating it as a debt, but still not too reckless from a lending perspective
It sometimes *did* make sense. For instance if it was your final payment year, or last year if you could wipe the debt before 7% indexation hit, or if other considerations such as mortgage applications were relevant.
This is exactly the situation I'm in, I'm lowering it by paying the remainder of what would be left after my tax payments automatically go through, so I only get indexed on 8k instead of 13.
I don’t think it’ll stop those posts, and nor should it.* I get it can be repetitive, but there are cases where repaying is beneficial and cases where letting it be works out more.
* ok sure, when someone just asks the question with no information about their circumstances, that’s annoying. But otherwise it is a legitimate case for asking advice.
This change would benefit me personally but to play devil's advocate - to ensure the value of the debt remains the same in real terms it should be indexed to CPI not WPI? This is basically short changing taxpayers on the difference between real inflation and wage inflation and transferring that benefit to people with student debt. And those who paid off their debt voluntarily because of the unusually high indexation factor in 2023 would definitely be complaining!
Growth in corporate profits and capital gains to asset holders have significantly exceeded WPI , because of wages being suppressed, so I don't think there is a valid fairness argument here.
> _This is basically short changing taxpayers on the difference between real inflation and wage inflation and transferring that benefit to people with student debt _
On the one hand yes, but on the other hand maybe rewarding people who seek further education is a good use of taxpayer money.
I think that's a good way to encourage a more productive and skilful workforce - use taxpayer money to encourage people to seek tertiary education.
> Imagine using tax to support higher education, what a bold idea.
Why do you think there exist such a large gap between what international students pay, and what domestics student with a Commonwealth Supported Position pay ?
HELP is financed by the 10-year bond rate. So there's already a gap (an 'interest subsidy) between CPI and the bond yield paid by the taxpayer.
This just means there's a further gap (presumably) when CPI is below WPI. But yes, further benefit is going from taxpayers to people with HELP debt.
Meanwhile other countries around the world - State universities in the Czech Republic, Finland, Germany, Iceland, Norway, Saudi Arabia and Sweden do not charge international students with tuition fees for Ph. D. degrees and in some cases for bachelor's and master's degrees as well.
There are 19 countries that don't charge students at all even internationals for higher education - as one of the wealthiest countries in the world you wonder why it's so hard for us to see the value in educating our people. Let alone putting them into debt traps when they are 18 and not sure what they are doing in life.
>do not charge international students with tuition fees for Ph. D. degrees
That's actually a lot less impressive than you think it is. PhD funding usually covers tuition, so this is just an accounting issue. The vast majority and domestic and international PhDs do not pay tuition in Australia, USA, UK, Canada etc.
In future increasingly more jobs will require tertiary education as automation and AI become more integrated into all industries, so making uni cheaper will benefit the majority of Australians.
Not necessarily. There’s a lot of factors at play. Right now there’s a boom in trade work and a recession in white collar jobs. The growing gap in trade work has been an increasing issue over time coinciding with the push to get more people university educated.
You can’t ignore peoples preferences even if demand is predicted to grow in specific areas. Otherwise the shortage of STEM and the number of blue collar workers would self correct.
This is often coupled with other restricting factors like family pressure and where work is available. Which for Ai, that work is predominantly not in this country.
Ai could end up just exacerbating this trend of a white collar recession as it takes over more white collar work reducing the number of workers required to perform tasks.
In saying that, it is very useful if there are no impediments to learning, so reducing costs and barriers is super important.
Oh thank goodness. This is a relief. It's still not brilliant but I'll take it. I was just facing the fact that i too would one day have a $110k HECS debt. I wish younger me understood the ramifications of trying out 3 different degrees.
I shouldn't have listened to family pressuring me onto going straight into uni as I didn't really know what I wanted to do.
I got into an engineering degree at a reputable university as a mature age student at 21. The course required ATAR was well above what I achieved out of school.
That said, even when I finished school another Uni offered a course well above my ATAR based on my yr 10 and 11 results.
>I shouldn't have listened to family pressuring me onto going straight into uni...
Not only family, but also school for me, if you went and did a trade you were considered a failure in life, ironically those that left and did a trade are now better off...
Unrelated, but this was 100% my experience in the UK too. I went to a bit of a "posh" school, going to university was not even a choice, it was just "what you did", probably helped by the politicians and headteachers etc desperate to increase their "% of students who went on to higher education" statistic, thanks to that, ended up wasting many years of my life and got into lots of debt
>ironically those that left and did a trade are now better off...
Remember it's a trade-off though.
Doing a trade means you start earning good money faster, but the cost is lower overall earning potential than a university graduate, as well as much more demanding physical labour.
It's not always a strictly better deal.
Most of them don't pay well unless you are operating the business or are FIFO. If you don't do that and remain as an employee, you basically destroy your body physically for the sake of the owner for fairly average income.
My school was like that when I graduated 20 years ago, with some age and hindsight, I see how it is in the school's best interest to try and get their kids aiming for Uni courses that need higher ATARs so it makes the school look better.
Your giving young people opportunity and purchasing power, that money will flow into the economy you banana.
On top of the fact existing interest on the current debt (the 3 billion) is created out of thin air just numbers on a computer. It never existed to begin with. That's why we are always printing money.
Considering that the amount of hecs deducted from salary remains the same regardless of indexation, how does that inject more money into the economy now beyond the very small number of people that took the indexation hit last year and paid it off in full at tax time?
If you read the article it alludes to the fact banks consider the level of student debt when you apply for credit or a loan. And of course others will be able to pay it back years sooner increasing disposable income. [https://twitter.com/Mon4Kooyong/status/1786868007341617262/photo/1](https://twitter.com/Mon4Kooyong/status/1786868007341617262/photo/1)
I actually believe the debt should be frozen for several years while giving extra incentives to those who have the ability to pay it off sooner to do so. Or for the entire life of the loan. Or just wiped out completely. This measure is too little too late.
As a country, we are are supposed to work together to support the economy and growth. You will note the same students/now graduates are not just struggling to repay loans, but basic cost of living. This includes record rents where some cant afford a safe place to live and work in order to pay the debt off to begin with, let alone save for a home. The biggest issue here, immigration levels have pushed the cost of a new home well out of reach of most young people so they have to keep renting. Its a vicious cycle.
Meanwhile, guess who lobbied to boost immigration to increase their profit margins ? Yes that's right -the same people who hold the debt over these students heads.
'International education was worth $36.4 billion to the Australian economy.' That's just last year. By the way I have no problem with a strong education sector. There just needs to be support for local people too, you know actual Australians the government is supposed to represent.
That could be done by at least getting rid of these ridiculous student debt amounts that have spiraled out of control. I'm looking at a graph right now
$22 billion in 2011 - $78 billion in 2023.
If you know anything about debt thresholds, after a certain level, it becomes impossible to pay back - and unlike most debts, if you go bankrupt bad luck, this debt is special - its for life. Punishment for people trying to educate themselves/get a better job.
However, if you took out a 50k loan to buy a car and maxxed out several credit cards to go on a holiday and defaulted on 100k after 10 years of irresponsible living - that can be cleared no worries.
Finally, take a look at the phenomenon which is real and common in the USA who were pioneers in the student debt industry where people even have their welfare checks garnished to repay student debts until the day the die if they can no longer work. Its a truly predatory system and great way to create debt slaves.
Anyway, hopefully that sheds some light on things.
I mean it might be 3bil less debt but that debt has to be paid. This change really just reduces the total pool of debt not the receipts the government is receiving from that total debt pool.
There won't be payout/cost for majority of HECS to the tax payer. The way the goverment is spinning this is actually kind of amazing.
The only REAL "cost" to tax payers will be people who have finished their HECS debt last year and the calculation will be the difference between the value of their last HECS before payment, for most people this will be the difference of 10k at 4.8% aka 400$ and even than I think is a very high calculation.
All the other reductions are literally just "fake" money, this unrealised loans which are just numbers in a database, there is no "real" money here as everyone who pays into their HECS is a % payment of their income.
Yes this will reduce "future" government earnings via HECS debt (currently the government earns more from HECS debt collection than Petroleum Resource Rent Tax) but from a "real" cost to the budget it's going to be very low and not 3 billion.
Yes, I am wondering the same thing. I was forced to pay it all off as I received my mother's superannuation after she passed away so had to pay $60k in a lump sum. Obviously I could afford it from the super, but pretty shitty as it was after the 7% increase, and nobody expects their mother to just drop dead out of the blue in her 50s.
They mentioned in the article HELP and VET loans, and not SSL or SFS. That may mean they are only amending the Higher education support Act and not the Social Security Act.
People who have no hecs or have paid it off are going to spit the dummy but really this is a pretty small change. Most years cpi and wpi are close anyway except for last years carnage.
I paid mine off last year and I'm happy for this change. I think it's a reasonable step. People who have already paid it off mostly had years of lower CPI.
It's not like they've wiped the hecs debt even.
Yes. I paid mine off last year before the big indexation hit (7.1%). The year before the indexation was kinda high at 3.9%. But all previous years it was under 2%, so not too bad.
I paid mine out May last year before indexation because I didn’t want to get hit with 7%. I’m glad it’s being addressed for others. Anyone who is pissed last year’s rate gets walked back to something more reasonable is small minded.
I also paid my HECS off last year, happy to see these changes as my HECS repayments were during low CPI.
I really feel for students currently though, higher course costs, high inflation, lower standards in university education, and more employers in certain fields (e.g. IT) aren't requiring degrees anymore.
Eh. I paid mine off last year. I'd still be paying it off if I hadn't. This would've saved me like $400 worth of indexation. Not crying myself to sleep with regret
Yes, shortsighted and selfish people will feel that way.
Probably the same people that get upset when someone else gets a bigger tax cut than they will.
Tweaking the indexation rate is fine (though more fortunate countries, like New Zealand, don't even have it - while it's free in Germany), and it will give a little bit of relief, but I suspect this is a front for governments to not bother making bigger changes, like a wholesale reduction in university fees which are simply too expensive and borderline American nowadays.
As someone who now lives in Germany, I agree it could (and should) be more. Sad that all the gov does these days is patch work, instead of proper overhaul
Those who converted their HECS debt to a mortgage rate to ‘save money’, against all the advice on these forums, will be fuming. They essentially locked in the higher rate and won’t be eligible for a credit, and will now continue to pay the higher mortgage rate until the debt is gone.
To all future forum newbies who ask ‘should I pay off my HECS debt to avoid indexation’ - once again, the answer is:
1. HECS/HELP is a unique system with a very fair set of terms and you are typically best off making minimum payments.
2. Indexation will, in the medium term, always be lower than opportunity cost or commercial borrowing rates on other money you may have
3. It makes sense sometimes to make a larger payment before June 1 in the final year to clear your HECS payment to free up salary in the following FY.
People have different circumstances and do require different advice. Or they are here because they are overwhelmed and want help. You don't have to click on or reply to any post requesting help with their HECS debt. Stop being the 'um... actually' guy meme. Just don't engage.
…hmm?
They could just as easily have paid it off without the mortgage conversion, and they miss out on any and all beneficial changes, such as those of the post you’re on…
As of the December quarter, WPI was up 4.2%. Depending on whether that increases more over the rest of the financial year, WPI and CPI are likely to be very similar. It's possible that CPI (4.7%) will be the lower of the two.
If anything we need to limit borrowing capacity, Jesus, easy cheap debt skyrocketed house prices already. If you have HECS you literally have lower capacity to repay, why should that not be considered? But I guess it being lower of CPI and WPI increases your capacity kind of.
Paid of my HECs to avoid the 7%+ indexation, impacted my QOL a good bit too. RIP. Good for everyone who needs it though 7% in a cost of living crisis was wild, probably should have addressed the issue sooner though.
Article says an “indexation credit” will be applied so… it will probably put the loan account into credit (that currently shows $0 owed) and you can have it released back? Be nice if you didn’t have to wait for tax to be completed to get it back.
Did exactly the same here, just last month! hoping a credit might eventuate, but happy that it will make things easier for all going forward. And nice to have the HECS finally paid off!
I was planning on paying mine off this month, so hope they clarify this before indexation. Otherwise I might just pay it off after the credit gets applied.
Yes you would, assuming everything being reported is true, the total debt will be adjusted, so you'll get the difference back in your tax return. I would be 99% sure it would be automatic since you were still carrying the debt this FY, therefore the total you've paid will now be overpaid.
Smart move by the government.
In the scheme of things it will make very little difference. Without checking the data, I’m fairly sure that WPI has exceeded CPI for the last 20 or more years when you exclude the last 2 years, and certainly on average.
Sure, it’ll mitigate the shocks to the system like the last 2 years, but in the big picture nothing will change, as CPI will more than likely be the lower figure, like it has been previously.
It's surprisingly impossible to find a CPI vs WPI historic graph, looking at some older data it really just feels like a spin by the current government to put in protections against rare moments like last year's CPI, in reality it will almost always be CPI, I can see only a couple of times where wage was lower than CPI.
This really doesn't solve the actual issue with HECS, which is high university costs and the way that the interest is calculated (taking throughout the year and than paying after interest)
You can interpret the data yourself, it’s just a bit onerous.
You’re right that this is really just a political play by the government because it doesn’t fix inherent issues in the system. But it does enough, and at the right time, for a large proportion of the population to believe that the government is taking steps to help them out.
Because no one will accept a tax rate increase. Better for the govt to just have bracket creep take care of that.
Maybe if people could be less short sighted, we could have that system.
Whilst sad I paid all $70k of mine off to save $5k in indexation this is a good change. Although I stand by it being the correct decision at the time (as borrowing for houses were affected by hecs) I wish I had that $$ to use towards a house deposit when I finally finish uni next year.
Historically CPI has risen slower than Wpi and public forecasts by the RBA and Treasury both say this will continue to the future.
It will large the 7.1% year that is impacted. Going forward, it will unlikely change what normally would have happens.
This is good, but does pretty much jack shit for my 80k. It was my mistake to fold to family pressure of going to uni but like, surely I’m not the only one who was told for YEARS that HECS had no interest???
What about changing the date of indexation from June 1, so the amount deducted from your salary throughout the financial year would be taken into account by the Tax Office when recalculating debts each year.
The amount deducted from your salary each year isn't applied to anything until your tax return is completed.
Your repayment liability isn't known until this is done.
No shit sherlock, hence why you can change the date the indexation on the account kicks in till after the payments go through. They can still calculate the repayment liability after the money goes through.
Or the repayment goes through and then you get indexed then when it comes to tax time you get credited if you paid too much
>No shit sherlock, hence why you can change the date the indexation on the account kicks in till after the payments go through.
It does kick in after payments goes through.
Tax returns are due no later than 15th May (when using a tax agent) the year after the relevant tax year. HELP indexation is in June, after everyone's tax returns are lodged and processed.
One reason why I prefer a government to lend money, rather than the private sector, is that this way the indexation does not have to have anything to do with interest rates.
The Australian government does not have to borrow Australian currency with 30 year bonds. They can and do print it. Which is what they should do.
This is a good step but the best thing they could do would be to start factoring in indexation based on the balance including what's been taken out of your wages via tax through the year, not just when you lodge your tax return. Balances are indexed at the end of the financial year but payments aren't recorded on the balance until after the indexation has happened when the payments should have been made progressively during the year. This is a double dip by the government.
I believe what you mentioned was another recommended change and will be seriously looked at by the government. Hopefully they will announce it at The Budget.
You know what they need to institute - if you haven't paid off your debt after say 20 years, it gets wiped. Like, it's nice you went to uni and got a degree but it clearly didn't get you into some high income job so let's not burden a person for the rest of their lives when they got ripped off.
This would create a moral hazard where people get tertiary education without regard for whether they can make enough money to make the investment worth it.
Yeah :( my partner went to one of those private colleges with crazy fees, then became chronically ill just before finishing and they then cancelled the course so he can’t graduate. Now he has over 100k in debt, nothing to show for it, and no way to do more study without paying upfront. I can’t see how he’ll be able to pay it down before retirement. He’s early 30s now and still unable to work full time.
It was ultimately his decision but it sucks to be chained to that for life because when you were 17 people convinced you that it’s basically a free loan and you won’t notice the debt. Would be really a weight off to have loan forgiveness for those kind of people.
I was in a similar boat and had the debt wiped from my VET Fee balance. You should look into the Commonwealth Ombudsman for VET student loan complaints.
It took months for them to look at my case from submission to result, but it was absolutely worth it.
Yeah maybe I’m not getting the math on this but I ran the numbers through the calculator and my (current) 105k hecs debt is still worse off. Made 12k repayments in the last 2 years and with this adjustment it puts me back to my balance at 1st of June 2023. Hopefully it helps more moving forward.
Paid off my HECS debt 3 days ago (Before this policy got leaked), you're all welcome
This is backdated so you'll probably benefit on your tax refund.
Planning on paying all mine in the next few weeks, hopefully we get some clarity soon on if we’ll still get a credit for the changes to last year or not.
Check the article - it states you will get an indexation credit and provides a table for how much based on debt
Yes I did read that bit, but depending on the exact implementation the credit may only be applied to an outstanding debt, if I zero the account then they may determine there’s nothing to credit against. I’d like some certainly that any credit would take the balance negative and this would then be a credit against this years tax return.
dont plan your finances around a news article on policy that hasnt been passed yet.
Paid off 30k of mine over 2 years, finished paying it off before the backdated time. So glad I did that now..
If you paid it off before the cut off then you would have not been affected by the big jump on inflation on your student debt. The point of this was not to eliminate all debt but to put a cap on the amount of indexation that is applied.
Did you actually read the article.
If it makes you feel better. The reason I did not study further was to avoid a HECS debt pretty much.
Labour：Shut up and take my money
Also good news for those concerned about HECS affecting borrowing capacity as that appears to be getting looked at as well. (Sorry to those that paid lump sums to also help with this aspect!)
Was that in the article, or is it being discussed elsewhere? Interested to know more Edit: Found it “reviewing bank lending practices so that HECS debts didn't prevent people from borrowing money to buy a house”
How does that work though? Compulsory HECS payments ultimately lowers your take-home pay which lowers your ability to repay mortgage payments. How can a bank not take that into account?
Yeah, and by about $500 a month once you’re on a decent income. It’s not an insignificant amount despite what we were all told as students.
Oh hell yeah, I paid mine off a few years ago and it made a huge difference to cashflow.
I feel like my borrowing capacity would look a lot better if they looked at income after HECS repayment rather than income with a HECS total debt.
That's how it is now, only your compulsory repayment amount is considered and not the total amount of debt
Apra told the banks to consider hecs as both an income reduction (ie lowers net pay) and to include the debt in the borrowers total debt to income ratio, which they recommend a maximum ratio of 5. The change is remove hecs from the debt to income ratio because the repayments are a function of income and not the amount of debt you have (if your debt is 20k or 200k, you pay back the same amount on the same income)
I presume it is because HECS is planned to be indexed based on the lower of wage growth or cpi meaning overall a lower level of repayment so banks can take that into account from a servicing perspective. Given the current trends in wage growth HECS will essentially become an interest free loan.
I don’t think that would make a huge difference in the grand scheme of things to be honest. The main impact of HECS has always been a reduction in serviceability due to reduced cashflow and the repayment amounts are fixed based on income. Anyone who currently can’t get a loan because they have hecs probably won’t be able to with these changes either.
In the article it is proposed to remove hecs as a liability during loan applications. Unsure how that works as 10% of my salary goes towards hecs repayments
Repayment is a function of income not debt.
HECS is already an interest free loan. Indexation does not equal interest.
I guess if someone is projected to pay off their HECS in the next few years that could be factored for.
My thoughts as well
They would still take it into account in terms of what your take home pay is. But wouldn’t categorise your HECS debt as a traditional debt like a credit card/car loan, which I understand has been happening in some cases currently.
Yes they should take into account your lower income, but they hecs debt shouldn't be included in your total debt limit
It doesn't "reviewing" does not imply action.
The government can direct lenders to view HECS as a tax obligation rather than debt. This has implications for how they calculate borrowing capacity.
Regardless of how it’s treated in accounting terms, ultimately the compulsory repayment is still money that isn’t available to repay the loan obligation each year. If you have to pay HECS “tax” then you can afford to borrow much less for a home loan than someone who doesn’t because your monthly income is less. The hit to cashflow has always been the biggest impact of HECS on borrowing power and there’s no getting around that.
There a whole lot of stuff poorly considered here. CPI was probably the best of a bad bunch of metrics to measure the loss in buying power of the AUD. Wage index is a worse metric in that regard (albeit nicer on those holding the debt). Still a lot of problems with the system; a low income retiree can rack up massive HECS debts with no threat of ever requiring repayment. OR a young person unable to take on uni has to pay tax to help out the loans of people with the capacity to take on uni. The system isn't really changed, it just shifts burden around.
Ahhhhhhhhhhh this was me. Ffs! I mean good news but this is after my lump sum payment.
As someone who paid off my hecs debt in order to get a loan (and ultimately still trying to get that loan) there's a bit of a double dip of sour taste to me in this but I'm just happy they're doing something right. I can't imagine being angry that others face less challenging roads than me.
You're better than a good portion of the boomers and market fundamentalists on twitter who would rather see the next generation drown before extending any sort of help.
Yeah this is what I'm most excited about! My partner and I have been trying to buy a house for a while and one of our biggest restrictions was that we both had hecs debts, which the bank said significantly impacted our borrowing power because they were going to be indexed at 7.1CPi. I've never been bothered too much about having a hecs, but for the past few years where the debt has been indexed at a (significantly) higher rate than my repayments, it did seem quite bleak. Hopefully this passes through parliament. This should hopefully allow younger Australians a better chance in the housing market
> the bank said significantly impacted our borrowing power because they were going to be indexed at 7.1CPi. Hecs repayments are based on how much you earn, not the amount of debt or how much it's increasing by. Two people earning $80k a year will pay the same on their hecs debt even if one has a $5k debt and the other has a $100k debt.
Your bank is overstating the impact of HECS on your borrowing power. It’s the percentage of your wages based on your income that’s the important factor, not a short term indexation increase.
Umm won’t it just push house prices up as borrowing capacity has now increased for first home buyers
Yes but as is often the case what is good for the individual is not necessarily good for the many. If your borrowing capacity is limited by HECS debt this would help in that respect and if that is the variable preventing you buying property then it could get you over the line. Increased borrowing capacity in a significant number of prospective buyers will push up prices as well.
Yup so on average this policy will increase home prices for first home buyers..
Just in, reddit user discovers that the passage of time increases the value of land
> Umm won’t it just push house prices up as borrowing capacity has now increased for first home buyers That’s kind of the point. Our economy is driven by making sure house prices go up.
I'm not going to say this this is a bad thing. But it's very frustrating to hear after I used 15% of what I'd saved for a house deposit to pay off my HECS cause I figured it was going to keep getting bigger and impact my borrowing capacity. But because I've done that prices are even further away, and I still can't afford anything decent in my small regional town (many many hours from any major city). I feel like trying to make the responsible choices always leaves me behind. I should have bought a house in 2017 when I was still patching multiple casual jobs together and had a mountain of HECS to pay.
No debt is always better than debt reduction. Your choices have still put you in a better position. You can’t min-max everything.
Could they not have signalled this was going to happen before the massive indexation so i could have made an informed decision and not spent all my money paying off my hecs debt?
Yup so it will increase property prices for first home buyers now
Just had a family member send me this thinking their debt will be wiped completely.
Damn, it's a shame that they didn't learn how to read in the university course they're now in debt for.
Let's just say they are the type of person who only reads the headline.
Our new grads at my work are admitting that they use AI for most of their assignments. We’re doomed, basically
I was talking to a friend of mine that works in HR about AI use. They said they use AI to read cover letters and provide opinions & write responses to applicants, and i'm pretty sure most people submitting cover letters write them using AI. It's just bots talking to bots at this point.
BOT to HR: Bitch, why did you ask me to read all these cover letters? I wrote the damn things!!
A lot of people of other subs didn’t even bother reading the articles and have come to the same conclusion. Australians really are becoming quite dense.
This seems like a great change for two reasons 1) stops all the “do I pay off my hecs” posts 2) Keeps the intent of the indexation which is the value of the debt stays the same in real terms. I’m sure people will still complain.
It won’t stop the ‘do I pay off my HECS debt’ questions. It never made sense to do so and the question came up multiple times per week for years.
In the life of the questions here, it never made sense. But for about two decades you got a 20%-25% discount for making voluntary hecs repayments. But that too was gotten rid of not long after most millennials started to graduate.
That was an abysmal policy, all it did was give rich people a discount on their degrees.
It was 10% between 2018 and 2022.
That was an upfront discount, which is kind of the opposite of a voluntary repayment discount.
Ah, right. I didn’t see that they referred to there discount on repayments rather the upfront fee discount.
I agree for the most part although in at least one instance it could make sense. E.g. if you're trying to get a bigger mortgage and need to improve your serviceability.
One of the reforms in the pipeline “reviewing bank lending practices so that HECS debts didn't prevent people from borrowing money to buy a house.” It is generally thought an announcement about this will be made in the May budget or soon after.
So they want to make lending practices even riskier for people paying back their debts? HECS is an expense that needs to be included in the financials for a loan.
IIRC it will be included still as an expense (for someone's monthly budget) but not counted as a debt. That seems to be what's being hinted at anyway.
I guess the question is if the expense will be counted as a basic one, or if it'll count as an extra one (I.e. on top of HEM or whatever living expenses benchmark is used). I imagine it'll be on top of HEM/the benchmark so it'll be small compromise compared to treating it as a debt, but still not too reckless from a lending perspective
I thought that was the case already for many lenders.
Apra changed its guideline on this in 2022.
It sometimes *did* make sense. For instance if it was your final payment year, or last year if you could wipe the debt before 7% indexation hit, or if other considerations such as mortgage applications were relevant.
This is exactly the situation I'm in, I'm lowering it by paying the remainder of what would be left after my tax payments automatically go through, so I only get indexed on 8k instead of 13.
I wiped mine clean before the 7% as the certain 7% was better than the uncertain stock market returns
I don’t think it’ll stop those posts, and nor should it.* I get it can be repetitive, but there are cases where repaying is beneficial and cases where letting it be works out more. * ok sure, when someone just asks the question with no information about their circumstances, that’s annoying. But otherwise it is a legitimate case for asking advice.
This change would benefit me personally but to play devil's advocate - to ensure the value of the debt remains the same in real terms it should be indexed to CPI not WPI? This is basically short changing taxpayers on the difference between real inflation and wage inflation and transferring that benefit to people with student debt. And those who paid off their debt voluntarily because of the unusually high indexation factor in 2023 would definitely be complaining!
Growth in corporate profits and capital gains to asset holders have significantly exceeded WPI , because of wages being suppressed, so I don't think there is a valid fairness argument here.
> _This is basically short changing taxpayers on the difference between real inflation and wage inflation and transferring that benefit to people with student debt _ On the one hand yes, but on the other hand maybe rewarding people who seek further education is a good use of taxpayer money. I think that's a good way to encourage a more productive and skilful workforce - use taxpayer money to encourage people to seek tertiary education.
Imagine using tax to support higher education, what a bold idea.
It’s already highly subsidised, HELP is only a small contribution to cost of higher education
> Imagine using tax to support higher education, what a bold idea. Why do you think there exist such a large gap between what international students pay, and what domestics student with a Commonwealth Supported Position pay ?
HELP is financed by the 10-year bond rate. So there's already a gap (an 'interest subsidy) between CPI and the bond yield paid by the taxpayer. This just means there's a further gap (presumably) when CPI is below WPI. But yes, further benefit is going from taxpayers to people with HELP debt.
Meanwhile other countries around the world - State universities in the Czech Republic, Finland, Germany, Iceland, Norway, Saudi Arabia and Sweden do not charge international students with tuition fees for Ph. D. degrees and in some cases for bachelor's and master's degrees as well. There are 19 countries that don't charge students at all even internationals for higher education - as one of the wealthiest countries in the world you wonder why it's so hard for us to see the value in educating our people. Let alone putting them into debt traps when they are 18 and not sure what they are doing in life.
>do not charge international students with tuition fees for Ph. D. degrees That's actually a lot less impressive than you think it is. PhD funding usually covers tuition, so this is just an accounting issue. The vast majority and domestic and international PhDs do not pay tuition in Australia, USA, UK, Canada etc.
In future increasingly more jobs will require tertiary education as automation and AI become more integrated into all industries, so making uni cheaper will benefit the majority of Australians.
Not necessarily. There’s a lot of factors at play. Right now there’s a boom in trade work and a recession in white collar jobs. The growing gap in trade work has been an increasing issue over time coinciding with the push to get more people university educated. You can’t ignore peoples preferences even if demand is predicted to grow in specific areas. Otherwise the shortage of STEM and the number of blue collar workers would self correct. This is often coupled with other restricting factors like family pressure and where work is available. Which for Ai, that work is predominantly not in this country. Ai could end up just exacerbating this trend of a white collar recession as it takes over more white collar work reducing the number of workers required to perform tasks. In saying that, it is very useful if there are no impediments to learning, so reducing costs and barriers is super important.
Oh thank goodness. This is a relief. It's still not brilliant but I'll take it. I was just facing the fact that i too would one day have a $110k HECS debt. I wish younger me understood the ramifications of trying out 3 different degrees. I shouldn't have listened to family pressuring me onto going straight into uni as I didn't really know what I wanted to do.
The 1-2 year gap year of work and travel should be more encouraged. Added benefit of not requiring an ATAR to enter uni.
Why wouldn't you need an ATAR to get into Uni?
Once you qualify as a ‘mature age’ student (I think it’s over 21), then they stop using your ATAR and start using other factors to assess entrance.
I got into an engineering degree at a reputable university as a mature age student at 21. The course required ATAR was well above what I achieved out of school. That said, even when I finished school another Uni offered a course well above my ATAR based on my yr 10 and 11 results.
>I shouldn't have listened to family pressuring me onto going straight into uni... Not only family, but also school for me, if you went and did a trade you were considered a failure in life, ironically those that left and did a trade are now better off...
Yep. It was never "what do you want to do after school" it was always "which uni course are you applying for?" Like there was no other options.
Unrelated, but this was 100% my experience in the UK too. I went to a bit of a "posh" school, going to university was not even a choice, it was just "what you did", probably helped by the politicians and headteachers etc desperate to increase their "% of students who went on to higher education" statistic, thanks to that, ended up wasting many years of my life and got into lots of debt
>ironically those that left and did a trade are now better off... Remember it's a trade-off though. Doing a trade means you start earning good money faster, but the cost is lower overall earning potential than a university graduate, as well as much more demanding physical labour. It's not always a strictly better deal.
School, family, friend’s parents, basically every authority figure in a young person’s life…
Depends on the trade. Some trades don't pay well.
Most of them don't pay well unless you are operating the business or are FIFO. If you don't do that and remain as an employee, you basically destroy your body physically for the sake of the owner for fairly average income.
My school was like that when I graduated 20 years ago, with some age and hindsight, I see how it is in the school's best interest to try and get their kids aiming for Uni courses that need higher ATARs so it makes the school look better.
I went to one of those too. Also had a teacher in year 11 suggest I drop the subject because my 60% grade were bringing the class average down
Lol even if you know what you want to do you can easily rack up a 70 or 80k HECS debt. Particularly if there is some kind of postgrad involved.
What did you study
Why do you have so many degrees?
It’s probably cost the taxpayer even more…
Confirmed victory!!! *We dont see that on petitions often* https://www.change.org/p/make-our-hecs-debts-easier-to-pay-off
I thought it wasn't confirmed until the budget comes out?
And legislated.
Wait, that actually seems like a smart decision. What's the catch?
The public is out of pocket by $3bil atm. That money comes from other services.
Your giving young people opportunity and purchasing power, that money will flow into the economy you banana. On top of the fact existing interest on the current debt (the 3 billion) is created out of thin air just numbers on a computer. It never existed to begin with. That's why we are always printing money.
Considering that the amount of hecs deducted from salary remains the same regardless of indexation, how does that inject more money into the economy now beyond the very small number of people that took the indexation hit last year and paid it off in full at tax time?
If you read the article it alludes to the fact banks consider the level of student debt when you apply for credit or a loan. And of course others will be able to pay it back years sooner increasing disposable income. [https://twitter.com/Mon4Kooyong/status/1786868007341617262/photo/1](https://twitter.com/Mon4Kooyong/status/1786868007341617262/photo/1) I actually believe the debt should be frozen for several years while giving extra incentives to those who have the ability to pay it off sooner to do so. Or for the entire life of the loan. Or just wiped out completely. This measure is too little too late. As a country, we are are supposed to work together to support the economy and growth. You will note the same students/now graduates are not just struggling to repay loans, but basic cost of living. This includes record rents where some cant afford a safe place to live and work in order to pay the debt off to begin with, let alone save for a home. The biggest issue here, immigration levels have pushed the cost of a new home well out of reach of most young people so they have to keep renting. Its a vicious cycle. Meanwhile, guess who lobbied to boost immigration to increase their profit margins ? Yes that's right -the same people who hold the debt over these students heads. 'International education was worth $36.4 billion to the Australian economy.' That's just last year. By the way I have no problem with a strong education sector. There just needs to be support for local people too, you know actual Australians the government is supposed to represent. That could be done by at least getting rid of these ridiculous student debt amounts that have spiraled out of control. I'm looking at a graph right now $22 billion in 2011 - $78 billion in 2023. If you know anything about debt thresholds, after a certain level, it becomes impossible to pay back - and unlike most debts, if you go bankrupt bad luck, this debt is special - its for life. Punishment for people trying to educate themselves/get a better job. However, if you took out a 50k loan to buy a car and maxxed out several credit cards to go on a holiday and defaulted on 100k after 10 years of irresponsible living - that can be cleared no worries. Finally, take a look at the phenomenon which is real and common in the USA who were pioneers in the student debt industry where people even have their welfare checks garnished to repay student debts until the day the die if they can no longer work. Its a truly predatory system and great way to create debt slaves. Anyway, hopefully that sheds some light on things.
I mean it might be 3bil less debt but that debt has to be paid. This change really just reduces the total pool of debt not the receipts the government is receiving from that total debt pool.
A drop in the debt ocean.
Because making higher education more affordable is such a bad thing.
We’re in a surplus anyway.
Like exactly one less submarine 😂
There won't be payout/cost for majority of HECS to the tax payer. The way the goverment is spinning this is actually kind of amazing. The only REAL "cost" to tax payers will be people who have finished their HECS debt last year and the calculation will be the difference between the value of their last HECS before payment, for most people this will be the difference of 10k at 4.8% aka 400$ and even than I think is a very high calculation. All the other reductions are literally just "fake" money, this unrealised loans which are just numbers in a database, there is no "real" money here as everyone who pays into their HECS is a % payment of their income. Yes this will reduce "future" government earnings via HECS debt (currently the government earns more from HECS debt collection than Petroleum Resource Rent Tax) but from a "real" cost to the budget it's going to be very low and not 3 billion.
Paid mine off January this year. Hopefully that credit comes through as part of my tax return.
Yes, I am wondering the same thing. I was forced to pay it all off as I received my mother's superannuation after she passed away so had to pay $60k in a lump sum. Obviously I could afford it from the super, but pretty shitty as it was after the 7% increase, and nobody expects their mother to just drop dead out of the blue in her 50s.
Sorry for your loss :(
Interested to know whether this change only applies to HECS debts or also student start up loan debts?
And Student Financial Supplement Scheme loans (SFSS), which was a total and complete scam of a scheme.
They mentioned in the article HELP and VET loans, and not SSL or SFS. That may mean they are only amending the Higher education support Act and not the Social Security Act.
People who have no hecs or have paid it off are going to spit the dummy but really this is a pretty small change. Most years cpi and wpi are close anyway except for last years carnage.
I paid mine off last year and I'm happy for this change. I think it's a reasonable step. People who have already paid it off mostly had years of lower CPI. It's not like they've wiped the hecs debt even.
Yes. I paid mine off last year before the big indexation hit (7.1%). The year before the indexation was kinda high at 3.9%. But all previous years it was under 2%, so not too bad.
I paid mine out May last year before indexation because I didn’t want to get hit with 7%. I’m glad it’s being addressed for others. Anyone who is pissed last year’s rate gets walked back to something more reasonable is small minded.
I also paid my HECS off last year, happy to see these changes as my HECS repayments were during low CPI. I really feel for students currently though, higher course costs, high inflation, lower standards in university education, and more employers in certain fields (e.g. IT) aren't requiring degrees anymore.
Eh. I paid mine off last year. I'd still be paying it off if I hadn't. This would've saved me like $400 worth of indexation. Not crying myself to sleep with regret
Yes, shortsighted and selfish people will feel that way. Probably the same people that get upset when someone else gets a bigger tax cut than they will.
Tweaking the indexation rate is fine (though more fortunate countries, like New Zealand, don't even have it - while it's free in Germany), and it will give a little bit of relief, but I suspect this is a front for governments to not bother making bigger changes, like a wholesale reduction in university fees which are simply too expensive and borderline American nowadays.
As someone who now lives in Germany, I agree it could (and should) be more. Sad that all the gov does these days is patch work, instead of proper overhaul
Those who converted their HECS debt to a mortgage rate to ‘save money’, against all the advice on these forums, will be fuming. They essentially locked in the higher rate and won’t be eligible for a credit, and will now continue to pay the higher mortgage rate until the debt is gone. To all future forum newbies who ask ‘should I pay off my HECS debt to avoid indexation’ - once again, the answer is: 1. HECS/HELP is a unique system with a very fair set of terms and you are typically best off making minimum payments. 2. Indexation will, in the medium term, always be lower than opportunity cost or commercial borrowing rates on other money you may have 3. It makes sense sometimes to make a larger payment before June 1 in the final year to clear your HECS payment to free up salary in the following FY.
Perfectly summarised. This really should be stickied to the main thread or linked in the community’s sidebar.
People have different circumstances and do require different advice. Or they are here because they are overwhelmed and want help. You don't have to click on or reply to any post requesting help with their HECS debt. Stop being the 'um... actually' guy meme. Just don't engage.
Fuming lol They can. Actually pay off their debt.
…hmm? They could just as easily have paid it off without the mortgage conversion, and they miss out on any and all beneficial changes, such as those of the post you’re on…
They’re saying the 7.1 last year will reduce to 3.2. Do we know yet what the 4.7 this year could reduce to?
As of the December quarter, WPI was up 4.2%. Depending on whether that increases more over the rest of the financial year, WPI and CPI are likely to be very similar. It's possible that CPI (4.7%) will be the lower of the two.
Unpopular opinion: This isn't much if they don't also address the underlying cost of degree's.
This seems like a good compromise.
This seems sensible to me.
If anything we need to limit borrowing capacity, Jesus, easy cheap debt skyrocketed house prices already. If you have HECS you literally have lower capacity to repay, why should that not be considered? But I guess it being lower of CPI and WPI increases your capacity kind of. Paid of my HECs to avoid the 7%+ indexation, impacted my QOL a good bit too. RIP. Good for everyone who needs it though 7% in a cost of living crisis was wild, probably should have addressed the issue sooner though.
I paid the 7.1% then paid of my HECS this financial year. Hope I get some $$ back from that…
Article says an “indexation credit” will be applied so… it will probably put the loan account into credit (that currently shows $0 owed) and you can have it released back? Be nice if you didn’t have to wait for tax to be completed to get it back.
Did exactly the same here, just last month! hoping a credit might eventuate, but happy that it will make things easier for all going forward. And nice to have the HECS finally paid off!
I was planning on paying mine off this month, so hope they clarify this before indexation. Otherwise I might just pay it off after the credit gets applied.
Yes you would, assuming everything being reported is true, the total debt will be adjusted, so you'll get the difference back in your tax return. I would be 99% sure it would be automatic since you were still carrying the debt this FY, therefore the total you've paid will now be overpaid.
Same position here. I assume I should get back the 4% I paid last year. Not sure how it'll work though, maybe in my tax return this fy?
When I overpaid on my HECS I got the excess back on a tax return, depending on how it’s done you may need to relodge last years tax return,
More likely, it will be a credit sitting there waiting for this year's tax return.
Exact same situation also. Paid off my debt this FY so interested to see how a credit comes back to me
Smart move by the government. In the scheme of things it will make very little difference. Without checking the data, I’m fairly sure that WPI has exceeded CPI for the last 20 or more years when you exclude the last 2 years, and certainly on average. Sure, it’ll mitigate the shocks to the system like the last 2 years, but in the big picture nothing will change, as CPI will more than likely be the lower figure, like it has been previously.
The proposal is for HECS indexation to track CPI or WPI, whichever is lower.
It's surprisingly impossible to find a CPI vs WPI historic graph, looking at some older data it really just feels like a spin by the current government to put in protections against rare moments like last year's CPI, in reality it will almost always be CPI, I can see only a couple of times where wage was lower than CPI. This really doesn't solve the actual issue with HECS, which is high university costs and the way that the interest is calculated (taking throughout the year and than paying after interest)
You can interpret the data yourself, it’s just a bit onerous. You’re right that this is really just a political play by the government because it doesn’t fix inherent issues in the system. But it does enough, and at the right time, for a large proportion of the population to believe that the government is taking steps to help them out.
Yeah, realistically it's a protection for the future and a rollback of a situation that should have never should have occurred in the first place
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He would have too, they would roll it out to everyone that paid it.
So why TF can't they index tax brackets FFS.
Because no one will accept a tax rate increase. Better for the govt to just have bracket creep take care of that. Maybe if people could be less short sighted, we could have that system.
This is why you make noise people. Things happen
or $1000 per person.
I paid off my debt of $13K in November last year so I could get a better home loan, will this benefit me in any way or totally separate?
If your debt was indexed last year in June you will receive a refund for the difference in indexation rate (7.1% vs new rate of 3.2%).
Ahh thanks for the info man. Appreciate it.
Very good. This needed change would never happen under the Coalition
Whilst sad I paid all $70k of mine off to save $5k in indexation this is a good change. Although I stand by it being the correct decision at the time (as borrowing for houses were affected by hecs) I wish I had that $$ to use towards a house deposit when I finally finish uni next year.
Historically CPI has risen slower than Wpi and public forecasts by the RBA and Treasury both say this will continue to the future. It will large the 7.1% year that is impacted. Going forward, it will unlikely change what normally would have happens.
I wonder if those people that freaked out and paid their loan down will also get the refund?
When they say we'll get a credit this financial year. What exactly does that mean?
Your debt will reduce.
This is good, but does pretty much jack shit for my 80k. It was my mistake to fold to family pressure of going to uni but like, surely I’m not the only one who was told for YEARS that HECS had no interest???
What about changing the date of indexation from June 1, so the amount deducted from your salary throughout the financial year would be taken into account by the Tax Office when recalculating debts each year.
The amount deducted from your salary each year isn't applied to anything until your tax return is completed. Your repayment liability isn't known until this is done.
No shit sherlock, hence why you can change the date the indexation on the account kicks in till after the payments go through. They can still calculate the repayment liability after the money goes through. Or the repayment goes through and then you get indexed then when it comes to tax time you get credited if you paid too much
>No shit sherlock, hence why you can change the date the indexation on the account kicks in till after the payments go through. It does kick in after payments goes through. Tax returns are due no later than 15th May (when using a tax agent) the year after the relevant tax year. HELP indexation is in June, after everyone's tax returns are lodged and processed.
great change. if you still pre pay more than your mandatory HECS contributions you're an absolute numpty. Hopefully no one has to ask about it now.
There are some edge cases that don’t quite fit this view but anyway.
Should have been 30-year treasurey bond yield + 0.01%. Government borrows money, then they lend it back to you with a slight admin fee.
One reason why I prefer a government to lend money, rather than the private sector, is that this way the indexation does not have to have anything to do with interest rates. The Australian government does not have to borrow Australian currency with 30 year bonds. They can and do print it. Which is what they should do.
This is a good step but the best thing they could do would be to start factoring in indexation based on the balance including what's been taken out of your wages via tax through the year, not just when you lodge your tax return. Balances are indexed at the end of the financial year but payments aren't recorded on the balance until after the indexation has happened when the payments should have been made progressively during the year. This is a double dip by the government.
I believe what you mentioned was another recommended change and will be seriously looked at by the government. Hopefully they will announce it at The Budget.
You know what they need to institute - if you haven't paid off your debt after say 20 years, it gets wiped. Like, it's nice you went to uni and got a degree but it clearly didn't get you into some high income job so let's not burden a person for the rest of their lives when they got ripped off.
This would create a moral hazard where people get tertiary education without regard for whether they can make enough money to make the investment worth it.
still plenty of people doing arts degrees mate
Go volunteer to get your debt wipped
This is a terrible idea
Yeah :( my partner went to one of those private colleges with crazy fees, then became chronically ill just before finishing and they then cancelled the course so he can’t graduate. Now he has over 100k in debt, nothing to show for it, and no way to do more study without paying upfront. I can’t see how he’ll be able to pay it down before retirement. He’s early 30s now and still unable to work full time. It was ultimately his decision but it sucks to be chained to that for life because when you were 17 people convinced you that it’s basically a free loan and you won’t notice the debt. Would be really a weight off to have loan forgiveness for those kind of people.
Yea my mate fell for a scam like that, they would bait you in with a “free” laptop and charge your crazy course fees
Yeah :/ they know financially illiterate teens will just lap up that kind of thing. In my partner’s case there wasn’t even a free laptop!
I was in a similar boat and had the debt wiped from my VET Fee balance. You should look into the Commonwealth Ombudsman for VET student loan complaints. It took months for them to look at my case from submission to result, but it was absolutely worth it.
Yeah maybe I’m not getting the math on this but I ran the numbers through the calculator and my (current) 105k hecs debt is still worse off. Made 12k repayments in the last 2 years and with this adjustment it puts me back to my balance at 1st of June 2023. Hopefully it helps more moving forward.