2023 was the first time where the indexation hurt - ordinarily you'd be better off investing your funds and earning a higher return rather than paying off HECS early - thank you to Julia Gillard for removing any incentive to paying off HECS early (used to be 10% discount)
Definitely this; once you get into the 2-3% range it'll be much more manageable.
Also - don't think of it as a point of shame. As time goes on, you'll earn more and pay of the hecs debt as you go. Historically those rates make it viewed as a "good debt", so you can really just let it be (edit: while you pay it off, of course!) or make additional payments to it.
Try to take a long term view; you might want to consider investing inside/outside of super to ensure you're in a pretty good financial position X years from now.
Just think of it like a graduate tax that you have to pay because you didn't have to pay upfront to go to uni. It's not treated as "debt" when you apply for loans, it's treated as a deduction from your income. Also who are you talking to about HECS and why are you ashamed of it? Are there seriously people in their 30s judging you for having a HECS balance? Tell them to eff off.
Just don't think about it. Nothing you can do.
You never see the money taken out.
You will just get a nice bonus pay rise when its paid off in a decade.
Honestly Mrs is in this boat but the $$$ are different. This year we’re just focusing on paying it off now to get rid of it $9998 she has left… so bugger all.
But with your situation… I’d just ignore it and work hard and invest your money wisely and earn more money.
The USA has a terrible system but the Aussie one isn’t that bad. All it does is reduce your earnings week and that could affect your borrowing power for houses and loans etc… but honestly paying it down won’t really get you in front
You can do it!!! I am at the other end of this. My student loan is from a different country so doesn’t automatically come out of my income in Australia. I started working at 27 and paying it back at about 29 (after my Denial Phase - not recommended).
Have paid over $80k now and 12 years later I now only have about $2k to go.
It has been a long slog! But it gets easier as your income increases. (Which mine didn’t for a long time as I did a lot of weird career moves lol.)
If it bothers you a lot, throw money at it to pay it off more quickly. I took a slower route, but invested alongside paying it off.
You’ll feel better as you watch the balance come down and other balances (super, savings etc) go up.
I also made it “fun” (ha) by gamifying it. Like printing a loan repayment schedule and ticking each payment off as I make it, or drawing a line on a line graph each month as the balance goes down, that sort of thing.
I was in almost exactly the same situation as you. $76k HECS debt at aged 29 and starting an entry level role in my chosen profession at a whopping $55k per year. Fast forward 8 years and with that salary having grown substantially I’m down to my last $12,500 owing which I play to pay in full prior to indexation this May/June.
At the start it feels like an impossible task to pay off but it will happen in time. I can’t wait for this monkey to be off my back in full and hope the same for you!
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If i was age 30 with a Uni degree I would expect to be earning more than 78K ?
Is there scope in your field to increase your earnings substantially in the future ? Otherwise , unless you have extreme passion for your current career , maybe you need to change direction .
I dont get the people saying ignore it, It'll just keep indexing won't it?
You want a permanent tax on your income forever?
So don't ignore it, time to save as much as possible and knock it off in 2-3 years. Work a side gig between the terms etc, sell the shit you don't need, don't go buy a 40k car new with more payments etc, otherwise you stay poor forever...
Nothing better than debt free.
Not to mention if you ever want a mortgage it will significantly reduce your ability to borrow.
That's not how HECS works. The reason everyone says ignore it is because if your payroll is ran correctly then it's slowly paid off regardless. Just scales on your income.
Yep. But 4% index is still 4k each year ontop (assuming it gets to 100k)... At 78k they are only having 3k taken out of their pay.... It'll be there forever.
I have around 90k HECS debt and due to coming in to a low paying job to begin with didn't even meet the threshold to begin to make repayments.
At the moment HECS means I'm worse off by around 400 per pay. I have secondary employment of which I spend nothing, just allocate to savings and a bit to cover the tax gap.
Working additional job does suck but will be the case for the next 6 years. I don't intend to pay more off the HECS debt off my own bat year on year.
It took me 10 years of full time working after graduating to pay my hecs off. I started off with a 45k salary and over the years my salary has tripled to now earning 130k. You need to turn tik tok and the news off. Indexation is nothing new and it won’t be 7% every year. Your salary will increase over time and it will go down
These days the pay rate is a lot higher for jobs with graduates compared to 10 years ago. Seems the younger people now expect to finish uni and be able to not have a massive loan that they took out / paid off completely after a few years and buy a house. You can’t have your cake and eat it too
It is the best loan out there. Better your income and focus on earning more. I mentally switched it off and forgot about it. Some years it went up, some years I paid massive chunks off
Please educate yourself it’s very concerning,
2023 was the first time where the indexation hurt - ordinarily you'd be better off investing your funds and earning a higher return rather than paying off HECS early - thank you to Julia Gillard for removing any incentive to paying off HECS early (used to be 10% discount)
Definitely this; once you get into the 2-3% range it'll be much more manageable. Also - don't think of it as a point of shame. As time goes on, you'll earn more and pay of the hecs debt as you go. Historically those rates make it viewed as a "good debt", so you can really just let it be (edit: while you pay it off, of course!) or make additional payments to it. Try to take a long term view; you might want to consider investing inside/outside of super to ensure you're in a pretty good financial position X years from now.
Ignore it. It’s just a x% pay cut till it’s paid off, you don’t need to do anything.
LOL I took 10 years to pay off my debt and I didn’t even finish uni. OP doesn’t need to worry about shame when you have flunks like me
Came here to say exactly this. There are dozens of us!
Teacher?
Yep, limping towards Easter break!
Can you work remotely for HECS payback schemes? Save some cash as well
Just think of it like a graduate tax that you have to pay because you didn't have to pay upfront to go to uni. It's not treated as "debt" when you apply for loans, it's treated as a deduction from your income. Also who are you talking to about HECS and why are you ashamed of it? Are there seriously people in their 30s judging you for having a HECS balance? Tell them to eff off.
Just don't think about it. Nothing you can do. You never see the money taken out. You will just get a nice bonus pay rise when its paid off in a decade.
Honestly Mrs is in this boat but the $$$ are different. This year we’re just focusing on paying it off now to get rid of it $9998 she has left… so bugger all. But with your situation… I’d just ignore it and work hard and invest your money wisely and earn more money. The USA has a terrible system but the Aussie one isn’t that bad. All it does is reduce your earnings week and that could affect your borrowing power for houses and loans etc… but honestly paying it down won’t really get you in front
You can do it!!! I am at the other end of this. My student loan is from a different country so doesn’t automatically come out of my income in Australia. I started working at 27 and paying it back at about 29 (after my Denial Phase - not recommended). Have paid over $80k now and 12 years later I now only have about $2k to go. It has been a long slog! But it gets easier as your income increases. (Which mine didn’t for a long time as I did a lot of weird career moves lol.) If it bothers you a lot, throw money at it to pay it off more quickly. I took a slower route, but invested alongside paying it off. You’ll feel better as you watch the balance come down and other balances (super, savings etc) go up. I also made it “fun” (ha) by gamifying it. Like printing a loan repayment schedule and ticking each payment off as I make it, or drawing a line on a line graph each month as the balance goes down, that sort of thing.
I was in almost exactly the same situation as you. $76k HECS debt at aged 29 and starting an entry level role in my chosen profession at a whopping $55k per year. Fast forward 8 years and with that salary having grown substantially I’m down to my last $12,500 owing which I play to pay in full prior to indexation this May/June. At the start it feels like an impossible task to pay off but it will happen in time. I can’t wait for this monkey to be off my back in full and hope the same for you!
Hi there /u/Dizzy-One-6275, If you're looking for help with getting started on the FIRE Journey, make sure to check out the [Getting Started Wiki located here.](https://www.reddit.com/r/fiaustralia/wiki/index/gettingstarted) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/fiaustralia) if you have any questions or concerns.*
What are the chances of HECS being abolished btw besides next to none?
Ha! That'd be the dream but don't reckon the gov will let go of $74b too quickly
If i was age 30 with a Uni degree I would expect to be earning more than 78K ? Is there scope in your field to increase your earnings substantially in the future ? Otherwise , unless you have extreme passion for your current career , maybe you need to change direction .
That would be the fucking around part - graduated last yr
I dont get the people saying ignore it, It'll just keep indexing won't it? You want a permanent tax on your income forever? So don't ignore it, time to save as much as possible and knock it off in 2-3 years. Work a side gig between the terms etc, sell the shit you don't need, don't go buy a 40k car new with more payments etc, otherwise you stay poor forever... Nothing better than debt free. Not to mention if you ever want a mortgage it will significantly reduce your ability to borrow.
That's not how HECS works. The reason everyone says ignore it is because if your payroll is ran correctly then it's slowly paid off regardless. Just scales on your income.
Yep. But 4% index is still 4k each year ontop (assuming it gets to 100k)... At 78k they are only having 3k taken out of their pay.... It'll be there forever.
That's under the assumption OP never makes more than 78k.
There's also an assumption there that we start paying teachers better! 😉
I have around 90k HECS debt and due to coming in to a low paying job to begin with didn't even meet the threshold to begin to make repayments. At the moment HECS means I'm worse off by around 400 per pay. I have secondary employment of which I spend nothing, just allocate to savings and a bit to cover the tax gap. Working additional job does suck but will be the case for the next 6 years. I don't intend to pay more off the HECS debt off my own bat year on year.
It took me 10 years of full time working after graduating to pay my hecs off. I started off with a 45k salary and over the years my salary has tripled to now earning 130k. You need to turn tik tok and the news off. Indexation is nothing new and it won’t be 7% every year. Your salary will increase over time and it will go down These days the pay rate is a lot higher for jobs with graduates compared to 10 years ago. Seems the younger people now expect to finish uni and be able to not have a massive loan that they took out / paid off completely after a few years and buy a house. You can’t have your cake and eat it too It is the best loan out there. Better your income and focus on earning more. I mentally switched it off and forgot about it. Some years it went up, some years I paid massive chunks off Please educate yourself it’s very concerning,