Debt, Don't Stress: The HECS-HELP Breakdown for Baddies

Ok babes, the time has come to learn about your university debt. I know what you’re thinking, anything to do with maths make me want to stick pins in my eyes too, but it’s important to know more about the HECS-HELP debt to prepare yourself for the… lets go with generous amount of money you owe. But don’t freak out you will be back to online shopping in no time and it's actually not as scary as it sounds, promise!

What is HECS-HELP?

Think of the HECS-HELP like a loan the government gives you to pay for uni. You don’t need to pay it upfront- thank goodness! The government covers your uni fees now, and you pay them back later, but only once you start earning a decent income. Last year it was $51, 550 in the 2023-24 year, now for the 2024-45 year it is $54, 435.

How does it work?

It's like a cute IOU with the government. They keep track of how much they’ve paid for your courses, and after you graduate and start working, they’ll take a small portion of your pay each year until it's paid off. And the best part? You only repay when you’re earning enough to afford it! It's giving consideration and kindness for us broke baddies over here!

The not so cute part – Indexation

Here’s the annoying part: every year, your HECS debt grows a little because of something called indexation. This is basically the government adding a bit to our debt to keep up with inflation. So, even if you’re not making payments, your debt gets bigger. Like seriously, give us a goddam break, it's giving inconsiderate! This is why some people end up owing more then they borrowed in the first place - ugh!

The bright side

The good news is HECS-HELP debt is super flexible. It's income-based, which means you’re never expected to repay more than you can afford. And, if you don’t make enough money one year, you don’t have to make repayments at all- so no need to lose sleep over it.

Whats new?

According to SBS News the government is talking about a new plan that could save the average grad about $1,200 a year, which is huge news for us broke baddies. Basically, they want to change how they calculate how much your debt goes up (thanks to our lovely friend, indexation). Right now, your debt increases based on inflation, but under this new plan, your debt will only grow based on either inflation or wage growth (whichever is lower). This could mean that your debt doesn’t grow as fast, which is a win!

How does student debt affect you?

Okay, so let’s say you’ve graduated, landed a super cute apartment and are ready to buy your first home. Surprise! Your HECS-HELP debt can actually make it harder for you to get a mortgage (a home loan). Lenders (aka banks) look at your HECS debt when deciding how much you can borrow, and it could reduce how much they’ll give you by ten times what you repay yearly. Yikes!

The bigger picture

HECS debt is hitting people at the worst times, plus degrees in areas like arts or humanities (hello, creativity queens) have way higher fees now, making it harder for people to pay off their loans. So what’s the vibe? The government is trying to help with these knew changes, but a lot of people are saying it's not enough. Lets hope we see even more improvements to student debt soon because we have enough on our  plates without that extra stress!

Talk soon my loves x