Calculating how long left to pay off HECS

[cimbom]

Hello,

Just wondering if someone who is a bit more mathematically minded can help me with my calculation. I'm just trying to calculate how long it'll take before my HECS debt is paid but including the adjustment they make for inflation.

My debt is ~50k at present. This is mainly due to an expensive post-grad degree I did for one year (didn't finish this degree) which pretty much doubled the balance. I am currently paying $130/fortnight (3.5k/year) in compulsory repayments.

I'm trying to calculate whether it'd be worthwhile going back and finishing this degree. If it's going to take me say 30 years or more to pay off the existing debt than I might as well finish the degree as I likely won't pay the debt off anyway. I might as well get something for the money I'll be paying.

Thanks

 

[Scott No Mates]

Without interest, inflation or an increase in income it's about 15 years.

If you add inflation @ 3% pa and no growth in income then it will be paid in 21 years.

What a benevolent society we live in.

 

[GreyGhost]

Hello,

Just wondering if someone who is a bit more mathematically minded can help me with my calculation. I'm just trying to calculate how long it'll take before my HECS debt is paid but including the adjustment they make for inflation.

My debt is ~50k at present. This is mainly due to an expensive post-grad degree I did for one year (didn't finish this degree) which pretty much doubled the balance. I am currently paying $130/fortnight (3.5k/year) in compulsory repayments.

I'm trying to calculate whether it'd be worthwhile going back and finishing this degree. If it's going to take me say 30 years or more to pay off the existing debt than I might as well finish the degree as I likely won't pay the debt off anyway. I might as well get something for the money I'll be paying.

Thanks

These rates may be outdated by a year but:

Pick range your taxable income falls in.
Eg 66K falls in 5% range
66K X 5% = HECS repayment for that year..
There is interest to consider but you should be able to roughly work out years remaining give or take a year...

Below $51,309 Nil
$51,309 - $57,153 4.0%
$57,154 - $62,997 4.5%
$62,998 - $66,308 5.0%
$66,309 - $71,277 5.5%
$71,278 - $77,194 6.0%
$77,195 - $81,256 6.5%
$81,257 - $89,421 7.0%
$89,422 - $95,287 7.5%
$95,288 and above 8.0%

 

[jerrybee]

I was paying down mine slowly over 3 years while I was working a relatively low salary job, then on the 4th year I got a new job with a big pay increase and suddenly I had to pay literally the rest of my loan in one shot. It was quite a shock to the system, but glad to have it out of the way!

 

[cimbom]

Thanks for the replies. They're very helpful. Nice to know there's a chance of paying it off before I retire

 

[bob shovel]

Hypothetical
If you have a low income but build/have a large portfolio of ip's will they still get their money back from you through ip's? Or is a creative accountant and trust setup required.

Just working angles so you never to pay it back!

 

[jerrybee]

Do the banks hold this debt against you when calculating serviceability?

 

[Corey Batt]

Do the banks hold this debt against you when calculating serviceability?

They certainly factor in any HECs payments - so this can impact investors serviceability.

As to HEC's, I had no debt by the time I left uni thanks to a strong income during that time period + early repayment discounts.

 

[Jamie M]

Do the banks hold this debt against you when calculating serviceability?

Sure do - the overall limit and monthly liability goes into your loan app.

 

[jerrybee]

Sure do - the overall limit and monthly liability goes into your loan app.

The overall limit? Even though repayments are a fraction of a regular loan's repayments? That's kind of harsh...

 

[Waldo]

I'm trying to calculate whether it'd be worthwhile going back and finishing this degree. If it's going to take me say 30 years or more to pay off the existing debt than I might as well finish the degree as I likely won't pay the debt off anyway. I might as well get something for the money I'll be paying.

Don't you mean get something for the money you won't be paying? You'd seriously consider going back to uni, only because you'll never have to pay the money back before you retire?

No worries - let me know if there is anything else you would like the tax payer to fund for you. Maybe a new boat or car?

 

[MarkB]

This is rough (I haven't even yet bothered to make it zero properly), but it pretty much works (bearing in mind the simplicity of the assumptions).

 

[Tim86]

My 4 year psych degree cost $24 000. Because of the way the tax free portion of my salary sacrificed income gets grossed up for hecs calculations, I end up paying a heap of hecs. In almost 4 years I've got the debt down to $11 200. Will be payed off in 2 more years