Remember they can always change the repayment plan, interest rates etc. Don't get comfortable with the idea of not paying it as you might be in for a surprise in the not too distant future. There is a lot of money owed to the govt from HECS and they are looking at ways to get it. If you owe it then just pay it off.
Pay off HECS?
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After I completed my double degree I had a big HECS debt. I didn't pay it off, because the interest on it was low. However, when you start earning money, I believe they take 10% of your income to pay your HECS debt, which meant I was forced to pay off my HECs debt in just 1 short year. 
We paid off my wife's HECS debt a couple of years ago and our reasoning was:
It was May and the amount of money already taken out that financial year and the amount taken out for the next financial year would take the debt to zero. So if we paid it voluntarily, we would get the 10% return (the bonus) over a thirteen month period - not bad for a guaranteed return.
Regards,
Jason
It was May and the amount of money already taken out that financial year and the amount taken out for the next financial year would take the debt to zero. So if we paid it voluntarily, we would get the 10% return (the bonus) over a thirteen month period - not bad for a guaranteed return.
Regards,
Jason
Im leaning with Y33s reasoning... am probably going to put in a few $500 installments a year to knock it down quicker.
With the amount paid, i dont think its anywhere near 10%, closer to 5%. But still then, to pay off a "big" HECS debt in a year is beyond impressive through the minimum repayments.
With the amount paid, i dont think its anywhere near 10%, closer to 5%. But still then, to pay off a "big" HECS debt in a year is beyond impressive through the minimum repayments.
Bump. It's approaching may, so anyone who wants to knock down their HECS debt to zero (assuming it was going to be paid out soon anyway) should do so now, like Y33 did.
However, we have a $20k hecs debt which isn't going down to zero anytime soon. I thought about making $5k voluntary repayments on it to get the amount down quicker but I think I'd rather take the interest free loan. (I'm aware that it is indexed, though, but even still, I believe we come out on top by keeping the cash in the offset account)
However, we have a $20k hecs debt which isn't going down to zero anytime soon. I thought about making $5k voluntary repayments on it to get the amount down quicker but I think I'd rather take the interest free loan. (I'm aware that it is indexed, though, but even still, I believe we come out on top by keeping the cash in the offset account)
I think this would be the only good reason for making a voluntary repayment. The 10% discount is only going to be significant if you have to pay it off soon anway (taking into account the very low interest rate on the loan).
I agree, I had my boss stop deducting HECS payments from my pay during the final year that it would have been paid on with my tax return. Instead of my boss withholding extra tax for it to be paid out with my tax return, I made the repayments myself to get the discount. Then when I lodged my tax return, my HECS debt was $0 and the tax office wasn't holding extra money of mine until I lodged my return to get the refund. I don't know if you can technically ask your boss to stop withholding extra tax while you have a debt but it was a small office so everything was pretty casual. But made no difference to my cashflow, and I got a 10% discount.
Just got hubby's HECS/HELP debt letter. Didn't realise that from 1 Jan 2012, the voluntary repayment discount had been reduced from 10% to 5%. Thought I would bump this thread up because making a voluntary repayment now has less benefit than it used to...
With a 10% voluntary discount, I did think about making a voluntary repayment to bring the debt down faster but now that it's 5% discount, I think I will just enjoy the interest free loan a little longe.r (the loan is only indexed to CPI, around 3% pa)
With a 10% voluntary discount, I did think about making a voluntary repayment to bring the debt down faster but now that it's 5% discount, I think I will just enjoy the interest free loan a little longe.r (the loan is only indexed to CPI, around 3% pa)
I was bored at work a couple of weeks ago and knocked up a little spreadsheet to help me decide whether to pay it off or not. I'll be paying mine off in full just before 1st june next year. It will be paid off by my automatic payments about july or august anyway, so I'm going to grab the 5% discount and dodge next years indexation.
It's interesting to note that they don't apply your automatic payments to your debt through the year. Your payments are only applied when you submit your tax return. So if your balance is $x in Aug '12 it will still be $x in may '13, and that is the figure that will be used for the final payoff and 5% discount. Anything extra paid during the year via PAYG will be refunded in your tax return.
It's interesting to note that they don't apply your automatic payments to your debt through the year. Your payments are only applied when you submit your tax return. So if your balance is $x in Aug '12 it will still be $x in may '13, and that is the figure that will be used for the final payoff and 5% discount. Anything extra paid during the year via PAYG will be refunded in your tax return.
I know people who have got their Australian Permanent Residency, got their HECS debt then returned back to their home country to work, never to return. Such rorting caused the government to force all non-citizens to pay their fees upfront without the discount.
I think it's sad that people can try to dodge paying the HECS debt by moving overseas etc (OK it's probably not the only factor that leads people to move overseas, but I'm sure there are some people who take the uni education then run). We are more than happy to pay back hubby's HECS debt because it gave him the education he needed for a career in IT that he loves. Undergraduate uni education is not actually that expensive (especially not when you compare it to postgrad!!! Why is postgrad so expensive... kind of hard to do postgrad unless you get your employer to sponsor part of it...)
Hi, I was told to take the HECS option even though I had the money to pay upfront.
It cost me about $13K to get a post graduate degree which looked pretty on my CV!
Finally, I decided to just pay it off instead of having it hanging around. Got the discount.
It was paid down to about 7K & when I said I was to pay the whole lot, the girl nearly fell off her chair.
If it's under $10K, I'd say pay it, get the discount & be finished with it.
Move on.
Think bigger. 5K should be small potatoes.
KY
It cost me about $13K to get a post graduate degree which looked pretty on my CV!
Finally, I decided to just pay it off instead of having it hanging around. Got the discount.
It was paid down to about 7K & when I said I was to pay the whole lot, the girl nearly fell off her chair.
If it's under $10K, I'd say pay it, get the discount & be finished with it.
Move on.
Think bigger. 5K should be small potatoes.
KY
Financially you'd be better off putting the cash onto your mortgage or in an offset account.
Cashflow wise, the HECS liabiltiy on your balance sheet can affect the outcome of a loan application and it may be useful to pay it off if you've got the resources.
Emotionally it's a nice feeling to be rid of it - I've now done this twice for both a degree and then a masters.
It comes down to your financial position, your goals and what's important to you.
Cashflow wise, the HECS liabiltiy on your balance sheet can affect the outcome of a loan application and it may be useful to pay it off if you've got the resources.
Emotionally it's a nice feeling to be rid of it - I've now done this twice for both a degree and then a masters.
It comes down to your financial position, your goals and what's important to you.
Only $13K?!? How many years ago was this? I have been looking into doing a postgrad degree and it's at least $18K for 1 year...
Admittedly there are some postgrad degrees eg M. Teach that have commonwealth supported places but not for the one I want to do.
I'd rather fake my own death!