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

[greedy2000]

I think in the future students will need to do some calculations as to whether or not its worthwhile to take on a HECS debt in exchange for future earnings potential.

I would say a $50K HECS debt is worth a $100K pa job. But a $50K HECS debt is not worth a $50K job.

I know of a student who have did a PHD in Philosophy, finished uni at 28 and now works in retail.... was that worth it? I'll let you judge. I know of another who did a 4 year bachelors, changed her mind and is now studying for another degree which will take a further 3 years to complete....

the mind boggles at what their HECS debt would be

I see Uni as a means to an ends, if there is no job at the end of it why bother?

 

[nhg]

Why not give us figures to work off so we don't have to guess?

What we do know is that you're 27yo and you did 7 years full time uni (even though UTS's engineering degree is 4 years ft)but at the same time worked for nearly 8 years with you earning 100Kpa for 3 1/2 years of the 7 - 8 years you worked.

Without figures I might not be able to do the sums but can assume that being 2 years out of uni and already having earned 100Kpa for all those years prior to age 27 says to me you're doing better than most (why I'm trying to make sense of your claims inc. that of hardly paying anything off your debt - which you now claim differently)... because most pay their debt off reasonably quickly with less income than that.

Are you anticipating not earning much over future years? If so why?

There seems to be a misunderstanding as to why I said what I said. My point is, if one hasn't been able to figure out how to live on their income minus the HELP deductions by the age of 40, what difference is it going to make if it takes them till 60 to pay it off or never.

The specifics of what I earnt, earn or will earn is not the point of this debate.

I think in the future students will need to do some calculations as to whether or not its worthwhile to take on a HECS debt in exchange for future earnings potential.

I would say a $50K HECS debt is worth a $100K pa job. But a $50K HECS debt is not worth a $50K job.

I know of a student who have did a PHD in Philosophy, finished uni at 28 and now works in retail.... was that worth it? I'll let you judge. I know of another who did a 4 year bachelors, changed her mind and is now studying for another degree which will take a further 3 years to complete....

the mind boggles at what their HECS debt would be

I see Uni as a means to an ends, if there is no job at the end of it why bother?

Uni only plays one part of the earning equation. Last year of uni, I spent more time preparing applications and for interviews than studying for exams.

We graduated our undergrad when the GFC hit. We started applying for jobs by opening the phone book at A, and calling down the list. 1 friend found his first job on his 131'st phone call. I found one 5 hrs from home.

We would go to the interviews, then get back to uni, break into a room with a screw driver so we could use the white board to coach our friends who were going to the interviews after us on the sort of questions we were asked.

My friends who didn't find work and continue to struggle getting over the $60k mark had very strict criteria of 10mins from home and did very little in regards to applying.

 

[weg]

There seems to be a misunderstanding as to why I said what I said. My point is, if one hasn't been able to figure out how to live on their income minus the HELP deductions by the age of 40, what difference is it going to make if it takes them till 60 to pay it off or never.

The specifics of what I earnt, earn or will earn is not the point of this debate.

No that was not what i was responding to. All my posts were in response to this comment of yours.

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

That is what I don't understand.

So what was the exact debt amount and what have you paid off?

We already know what you earned so why not tell us what the debt is??

 

[HotRod]

Why not give us figures to work off so we don't have to guess?

What we do know is that you're 27yo and you did 7 years full time uni (even though UTS's engineering degree is 4 years ft)but at the same time worked for nearly 8 years with you earning 100Kpa for 3 1/2 years of the 7 - 8 years you worked.

Without figures I might not be able to do the sums but can assume that being 2 years out of uni and already having earned 100Kpa for all those years prior to age 27 says to me you're doing better than most (why I'm trying to make sense of your claims inc. that of hardly paying anything off your debt - which you now claim differently)... because most pay their debt off reasonably quickly with less income than that.

Are you anticipating not earning much over future years? If so why?

Let's have a go.

7 years uni, 4 doing engineering and say 3 commerce, the debt should be about $65K using those UTS values.

Assuming a starting salary of $65K and rising to $100K after 3/4 years we get:

Debt Salary Repayment
$65K $65K $2.9K
$63.9K $80K $4.8K
$60.9K $90K $6.3K
$56.3K $100K $8K
$49.7K $110K $8.9K
$42.1K $120K $9.6K
$33.5K $125K $10K
$24.2K $130K $10.4K
$14.2K $135K $10.8K
$3.5K $140K $11.2K

So, roughly 10 years to pay off without adding any extra payments.

If you put 10% of your income into paying it down (this includes the compulsory HECS bit) it will take 8 year to pay down.

Increase it to 15% and it will take 6 years to pay off.

Not beyond the realms if one is responsible with their savings/debt repayment and develop sound money habits.

Read The Richest Man in Babylon, that's full of helpful hints.

Start early and develop a habit of always using a set portion of your income for either savings/debt repayment/investing and live off the rest. You'll never miss it.

 

[weg]

Let's have a go.

7 years uni, 4 doing engineering and say 3 commerce, the debt should be about $65K using those UTS values.

There have been lots of sums but no debt figure forthcoming.

5 years of Engineering (it's 4 years ft) and 2 of Masters by my calcs is closer to 50K.

 

[nhg]

There have been lots of sums but no debt figure forthcoming.

5 years of Engineering (it's 4 years ft) and 2 of Masters by my calcs is closer to 50K.

Jeez you guys are eager. I never paid attention. It was something like $60k (I failed subjects as well). UTS is 5 years full time. It's somewhere around low $40k now.

I earn a lot less than before as I usually take a few months off every few years and as of mid 2013, I've taken a year off to chill with fam and have since started the business. Also my 'taxable' income is low due to depreciating and undertaking investments which allow me to reduce it.

 

[cimbom]

Let's have a go.

7 years uni, 4 doing engineering and say 3 commerce, the debt should be about $65K using those UTS values.

Assuming a starting salary of $65K and rising to $100K after 3/4 years we get:

Debt Salary Repayment
$65K $65K $2.9K
$63.9K $80K $4.8K
$60.9K $90K $6.3K
$56.3K $100K $8K
$49.7K $110K $8.9K
$42.1K $120K $9.6K
$33.5K $125K $10K
$24.2K $130K $10.4K
$14.2K $135K $10.8K
$3.5K $140K $11.2K

So, roughly 10 years to pay off without adding any extra payments.

If you put 10% of your income into paying it down (this includes the compulsory HECS bit) it will take 8 year to pay down.

Increase it to 15% and it will take 6 years to pay off.

Not beyond the realms if one is responsible with their savings/debt repayment and develop sound money habits.

Read The Richest Man in Babylon, that's full of helpful hints.

Start early and develop a habit of always using a set portion of your income for either savings/debt repayment/investing and live off the rest. You'll never miss it.

If you're never planning on having any other debt, then sure, pay it off. Not sure why you'd bother if you had a mortgage or other debts as well. Also, you left out the CPI indexation

 

[HotRod]

If you're never planning on having any other debt, then sure, pay it off. Not sure why you'd bother if you had a mortgage or other debts as well. Also, you left out the CPI indexation

CPI is there.

Funny thing is, young people on $100K plus will go splash out on that flash car, eat out/go out every weekend and run up a nice CC debt and not think twice about the $30 to 40K that evapourates to support their lifestyle, yet complain about a debt that has a very low interest rate that they are forced to pay down.

I just don't get it.

 

[Bantam Roosta]

Also, you left out the CPI indexation

I think you'll find he included CPI of about 2.8% in the calculations.

BR

 

[cimbom]

CPI is there.

Funny thing is, young people on $100K plus will go splash out on that flash car, eat out/go out every weekend and run up a nice CC debt and not think twice about the $30 to 40K that evapourates to support their lifestyle, yet complain about a debt that has a very low interest rate that they are forced to pay down.

I just don't get it.

I'm not making 100k+ but I totally get it. It's the same reason why people with income and assets in the millions use tax minimisation strategies so they have more cash to spend on what they value. Unless you're donating extra tax every year, I don't see your point. I guess it's different when "young people" are involved.

 

[HotRod]

I think you'll find he included CPI of about 2.8% in the calculations.

BR

Bingo!

 

[eeho]

This may be a silly question, but does anyone know if the money taken out of your pay each fortnight gets applied to the HELP/HECS loan as it is taken out? Or applied at the end of the financial year as a lump sum?

I just rang the tax office to get my balance (almost $50k...eek!) after reading this thread, and it doesn't seem to have moved since last year, even though my payslip shows over $5k has been taken out towards it this financial year...

 

[Hoffy]

I'm not making 100k+ but I totally get it. It's the same reason why people with income and assets in the millions use tax minimisation strategies so they have more cash to spend on what they value. Unless you're donating extra tax every year, I don't see your point. I guess it's different when "young people" are involved.

The analogy only holds if those with the HECS date aren't whinging that they will never be able to pay it down.

 

[sanj]

CPI is there.

Funny thing is, young people on $100K plus will go splash out on that flash car, eat out/go out every weekend and run up a nice CC debt and not think twice about the $30 to 40K that evapourates to support their lifestyle, yet complain about a debt that has a very low interest rate that they are forced to pay down.

I just don't get it.

This is in no way, shape or form limited to younguns
A significant proportion of the aussie population are absolutely useless money managers.

 

[fokas]

CPI is there.

Funny thing is, young people on $100K plus will go splash out on that flash car, eat out/go out every weekend and run up a nice CC debt and not think twice about the $30 to 40K that evapourates to support their lifestyle, yet complain about a debt that has a very low interest rate that they are forced to pay down.

I just don't get it.

I agree with you here, but I'm also surprised at how many people here don't seem to care about their HECs debt and let it all be paid off 'in good time' as it's meant to.

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.

Cimbom has a point. Does this mean most people commenting in this thread with HECs debt that they aren't concentrating on paying off are earning well over $100kpa?

My HECS debt was at $19,554 when I inquired on it in May, and I still have 11 subjects to go (Business degree which I started at a different uni, transferred after 7 or so subjects and had to redo 5 of them - irritating) so I'm guessing it will be at about $40k by the time I'm done...hardly worth it for an undergrad imo and part of the reason I really need to push myself to motivate myself to finish it.

 

[jroth]

This may be a silly question, but does anyone know if the money taken out of your pay each fortnight gets applied to the HELP/HECS loan as it is taken out? Or applied at the end of the financial year as a lump sum?

I just rang the tax office to get my balance (almost $50k...eek!) after reading this thread, and it doesn't seem to have moved since last year, even though my payslip shows over $5k has been taken out towards it this financial year...

It doesn't get applied until you do your tax return which confirms the amount you need to repay. I think the payout figure should be after last FY's contributions plus indexation.

 

[eeho]

It doesn't get applied until you do your tax return which confirms the amount you need to repay. I think the payout figure should be after last FY's contributions plus indexation.

Excellent, thanks JRoth!

 

[monalisa]

Also my 'taxable' income is low due to depreciating and undertaking investments which allow me to reduce it.

The former tax accountant in me couldn't help it...

Investment loss incl rental loss gets added back to taxable income when calculating HELP debt repayments.

 

[nhg]

I agree with you here, but I'm also surprised at how many people here don't seem to care about their HECs debt and let it all be paid off 'in good time' as it's meant to.

It goes up by 2.8%/year CPI.

My investments go up about 8%/year + positive cashflow. Why would I sink good money into paying off something so trivial any earlier?

Even if I wasn't an investor, it would be better off left in an offset account.

 

[nhg]

The former tax accountant in me couldn't help it...

Investment loss incl rental loss gets added back to taxable income when calculating HELP debt repayments.

Dang.

fyi for the record. To clarify, I don't have an issue with increasing costs of tertiary education. Predominantly I see it as a waste of time and the current system breeds mediocrity. I love to learn and continue to take on mentors. Yet a system that promotes "more degrees = more money" as a mindset is redundant in such a fast paced world.

I do have a problem with doing it in the way being proposed. I most certainly have an issue with any cuts to primary and secondary education. Especially if it results in cutting things like physical ed, music, and every other extra curricular activity that promotes creativity and/or thinking outside the box.