Anyone have HECS debt and what do they think about new budget rates?

Hey all,

Just wanting to know what others are thinking with regards to the new HELP debt rates due to come in from June 1st 2016 onwards.

I'm living in Canada at the moment so I'm not paying anything down on the roughly ~25k I owe, but I have this saved up and sitting in a high interest saver which was supposed to be a home deposit in the next few years. Now I'm thinking I might just pay it off, get the 5% discount and start saving again!

What are other people's thoughts?
 
Yeap, I still have $11k HECs.

Going to pay this off, it's currently affecting my serviceability and the increased rates is added incentive to pay it off.
 
Looks like Abbot's measures are working. Two people so far who can pay off their debt will now choose to do so.
 
My wife has about $2.5k left. Because the amount is so low, we will just wait until she returns to work and the let the system finish it off. We could easily get rid of it, but don't have an intention on doing so.

In saying that, I haven't done any modelling on the two options. It may end up being worth paying off earlier. I'll have to do my sums now. Thanks.

BR
 
I still have hecs debt, I don't know how much is left and don't really mind. The way I see it, is that even with the new legislation, interest rate on my hecs debt is going to be 3.5%. Interest rate on my PPOR is 5%. Rather place that difference in a savings or offset account.

Also, if I go overseas or lose my job, I don't have to keep paying the hecs until I'm gainfully employed again. With a normal loan, the bank will still require you to pay up.
 
Hey all,

Just wanting to know what others are thinking with regards to the new HELP debt rates due to come in from June 1st 2016 onwards.

I'm living in Canada at the moment so I'm not paying anything down on the roughly ~25k I owe, but I have this saved up and sitting in a high interest saver which was supposed to be a home deposit in the next few years. Now I'm thinking I might just pay it off, get the 5% discount and start saving again!

What are other people's thoughts?

I don't see why it would change your mind.
From 2016 instead of being index to CPI it will be at the same rate as the 10 year government bond (max 6%), not a big change, your high interest saver probably still pays better and you can still retain the advantages of not paying when not in work or overseas

hopefully i will have my debt paid off after this years taxes :)
 
If you have money sitting in a high interest account you're probably going to be paying tax on so you may not be better off holding back the hecs repayments after all.
 
Thanks for everyone's responses, I was leaning towards paying it off early. It just lashes s bad taste in my mouth that the rules can be changed, luckily I'm in a position to pay it off but I'm willing to bet the vast majority won't.

It should be noted that almost all other countries don't have this set up, so we should probably still consider ourselves lucky...

Cheers
 
What are other people's thoughts?

I believe If you've got a debt dating from before the budget your arrangements are grandfathered and indexed to cpi.
Those signing up for debt between the budget date and when the new arrangements take affect will have their debt indexed initially under the old system and then transitioning to the new system.


It should be noted that almost all other countries don't have this set up, so we should probably still consider ourselves lucky...

Cheers

I was thinking if they make it too expensive to attend university in Australia there might be a business opportunity for our campuses to off shore.
Set up a Uni in a country like Thailand aimed at Aussie students.
The living and labour is cheap there so they could offer packages of serviced accommodation, food and education.
Cheap flights to visit home between semesters.
 
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I believe If you've got a debt dating from before the budget your arrangements are grandfathered and indexed to cpi.
Those signing up for debt between the budget date and when the new arrangements take affect will have their debt indexed initially under the old system and then transitioning to the new system.

That's what the minister said but not what their website says.
The government's Study Assist website clearly states that the new indexation arrangements will ''apply to all HELP debts (including those incurred by former students, continuing students and new students) continuing and new students beginning with the indexation of debts on 1 June, 2016''.

Read more: http://www.smh.com.au/national/educ...udent-loans-20140601-39cgv.html#ixzz33PaSmrlZ
 
Hecs

Hi

In my country, parents can use their super to help pay the university fees:p but bear in mind,our super is 40% rate:p (half from employer and half from employee)

As a result . we have no ballooning HECS debt in my country ...my friends and i graduated with NO debt hanging over our heads. ZILCH!
 
I have about 50k owing and no intention of paying it off myself outside of the normal contribution out of my fortnightly pay
 
I have a $50k hecs debt left.

The way I see it. Even if it was purely a UAI based system. The kids most likely to get in will be the ones which were given every opportunity for tutoring/assistance in their pre-uni years. So basically free education is a subsidy for the wealthy anyways. May as well charge people for it.

There is a disadvantage either way for those with less funds for education.

I do have an issue with the 6% interest rate (I believe) they will charge. That will make it an endless debt.

I'd much rather see an increase in funds being diverted to primary and secondary education and a big push for trades and business. Though that is out of the scope of this discussion.

My friends disagree with me strongly. It's been a big topic of conversation amongst my peers.
 
The kids most likely to get in will be the ones which were given every opportunity for tutoring/assistance in their pre-uni years. So basically free education is a subsidy for the wealthy anyways. May as well charge people for it.

There is a disadvantage either way for those with less funds for education.

I think this is flawed logic. If it's already difficult for low income students to enter university, creating additional barriers will just make it worse. Even if 10 low income kids decide not to go to uni because of this then that is a big failing on our part. Surely we can just cut a bit of corporate welfare or trim our defence budget ever so slightly to keep the system that we have now.
 
I do have an issue with the 6% interest rate (I believe) they will charge. That will make it an endless debt.

How do you figure 6% would lead to a perpetual debt?

Isn't then rate just going to be the 10 year govt bond rate with a cap at 6%? so often well below 6%?
 
How do you figure 6% would lead to a perpetual debt?

Isn't then rate just going to be the 10 year govt bond rate with a cap at 6%? so often well below 6%?

It will be a perpetual debt at this rate unless you consistently earn over 100k/year. Only about 5-6% of the population makes this as their annual income. If you make less, the repayments won't even cover the interest.

I have a HECS debt of 50k and even with the current arrangement, it likely won't be paid off unless I make additional voluntary repayments.
 
I think this is flawed logic. If it's already difficult for low income students to enter university, creating additional barriers will just make it worse.

What additional barrier exactly? If they get in, they only pay it back once their income reaches a certain threshold, in the same way I am paying for it now.
 
I have a HECS debt of 50k and even with the current arrangement, it likely won't be paid off unless I make additional voluntary repayments.

Exactly.

And why do that when I can use the money to invest in real estate. Seriously.

7 years of work half of it close to/over $100k, and I barely made a scratch on my HECS debt.

To get the higher positions you usually go and get a post-grad degree as well which keeps adding to the debt.
 
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