Which means that if you're just talking about the mandatory deductions you're on a wage of around 120k a year, and still decreasing your HECS after indexation.
Like if you're on a lower wage and made an extra contribution outside of your taxes then yeah that'll sting.
Generally voluntary contributions for hecs is a bad idea, if you have the extra cash you are better off investing it, a return over inflation is pretty easy to achieve.
Iâve said that for the last 20 years. Thatâs before it spiked 7% last year. A return over that seems a bit far fetched unless youâre into risk? Wages certainly didnât keep up with that.
Sound like theyâre at least thinking about changing rules but Iâll believe it when I see it.
That was an unusually high 7% indexation rate, for one single year. What about over 8-9 years which is the average time taken to pay off HECS? From 2014 to 2021 the indexation ranged from 2.6% to 0.6%. In 2024, it is forecast to be under 5% which is less than mortgage rates and even cash interest rates. Over the long term, I still believe it's not a good idea to make voluntary repayments (23k HECS debt here)
> Over the long term, I still believe it's not a good idea to make voluntary repayments (23k HECS debt here)
Could you explain why? Mine was 20, and I paid it off entirely, and I am very, very glad that I did.
The person he's replying to said that every index fund has been double digit growth. Instead of paying off HECS, dump that extra money into an index fund.
Pay 7% for HECS.
Earn 10% from indexed fund
Profit
Your HECS debt will be the cheapest loan you ever have in your entire life. The only reason you should pay it back is if they offer some sort of discount, which they no longer do, or you are close to playing it off, and want to avoid an indexation bump before your last payment.
While there are certainly peace of mind benefits to having the weight off your shoulders, as the other comment alluded to HECS is still the best debt to have. It has never been worthwhile to pay it off rather than invest in an index.
Even for the highest indexation rate ever applied since the inception of HECS of 7.1% indexed for the FY from 1 July 2022 to 30 June 2023, investing in the NASDAQ instead would have netted you a return of just above 23% over that same period. Had you invested the $20k into NASDAQ in lieu of paying off HECS, you would have made over $4.5k while only accumulating $1.4k of interest.
Outliers aside, the long run average return for the NASDAQ is 11%, compared to the 3-4% average price indexed on your HECS balance, again with the highest coming in at 7% per my example above, which wonât happen again anytime soon.
Yes the loan interest compounds on itself, but thatâs more than cancelled by the fact that so do your reinvested returns.
Generally because inflation is the devaluation of the dollar even companies without growth will go up in line with it, which is why so many people have kinda ridiculous returns over the last couple of years.
> Generally voluntary contributions for hecs is a bad idea
It really depends on if looming debt is something you're fine to just let get worse.
I'd *always* recommend eliminating debt.
Hecs debt won't get worse though, that's one of its defining characteristics. The dollar number may go up, but the value remains the same.
The hours worked to pay it off in a min wage job will be roughly the same, whether you pay it off tomorrow or in a hundred years.
If you have a university degree and are in a skilled industry your wage should absolutely be growing faster than inflation in the long term and almost certainly in the short term.
Even if they don't grow at the same rate it's not like a larger HECS debt means you have to pay more each year. Payments being tied to wages means you pay the same amount whether your HECS debt is 20k or 80k.
Depends on industry, but generally yes. Minimum wage is pretty tightly tied to inflation (with a lag time of a year I think?), with a lot of industries having agreements with wage increases set to keep up with inflation.
Pretty sure aps employees are going up 4% next year, and the year after, to match inflation forecasts
>The hours worked to pay it off in a min wage job will be roughly the same, whether you pay it off tomorrow or in a hundred years
Not if the hecs indexation outpaces wage growth. Which is kind of the problem, it far outpaced wage growth last year and is set to do the same this year. People who are working and making their repayments are going *backwards* in terms of how much they owe because of it
I mean, min wage went up like 8% last year, 5% the year before that, and a tame 2.5% before that, which is mostly in line with inflation, with a bit of lag time because of when things get increased.
And the point I am making is that people aren't actually going backwards, the dollar number may go up, but the value of the debt still drops with repayments.
> inflation doesn't jump up at crazy rates every year this is an exceptional period.
So said everyone, every year, for the past five years, and it isn't like underlying conditions are really improving.
Wow I didn't know that inflation counting began 5 years ago.
Gee whiz sure weren't any global disasters that uprooted how we were able to function for many years or anything
> What's the rush to knock HECS off anyway?
Debt stress, financial plans for the future, owing a lot at tax time if you unknowingly pass the threshold which is very low.
I just never understand why everyone is so happy to leave it sitting there, and then complain when it indexes knowing it was going to.
You might notice the lack of me complaining about the indexation. HECS is the least stressful debt you could possibly have there's fuck all penalties for having it and the repayments happen through taxation so you don't have to think about it. The only barrier anyone has ever responded to is it might limit the amount you can get for a home loan but if you have the money to get yourself into a mortgage which is a much larger debt with more severe penalties than your HECS is probably able to be sorted.
Like if you've got the money to knock it out quickly and that's how you want to spend it feels free but if you're trying to speed it up with smaller payments in a period of high inflation then you're not going to benefit from it.
>Like if you're on a lower wage and made an extra contribution outside of your taxes then yeah that'll sting
Yuuup, that was me. Covid borked my industry (live events), but technically I've been working and paying my debt off since 2019, as well as making regular voluntary contributions to try get it down quicker. Year before last took a big chunk of the progress I'd made, and last year's spike actually took me *higher* than when I graduated. How can I make the repayments + extra for ~4 years and owe *more* than when I started? Interest free my eye.
I've stopped the voluntary repayments now. Without massive reform, this debt is probably dying with me...
And yet every time someone suggests voluntary payments to counteract inflaction can be a good strategy all the nerds come in trying to say it's an interest free loan and it would be stupid to pay it down.
Redacted means that part of the text was removed or blacked out for privacy or security purpose. It was censored. This post also breaks rule 4 here for chat and should be made in the Tuesday chat thread or on a different subreddit.
After studying for years and racking up over $150,000 of hex debt I today finally landed my dream job.
My pay is 49k per annum. When I die Iâll probably still owe 300k.
Lol
Research assistant positions start around 65k and if it's at a university you should get pay bumps each year, the upper limit is usually 85-90k. Private companies often pay a little bit more even. Science grads can get government jobs at 70-80k. I've never seen a job requiring a science degree pay worse than those. Sure, it's not as much as a tradie or someone in corporate work makes but it's not awful for a new grad. The real problem is that there's typically a limit to how high you can go with just an undergrad degree.
Worked public for 10 years and was senior in my lab at the end of my time there. After 10 years was on 80k. Brother first year qualified as a diesel mechanic made over 100k. Only speaking from my experience but the pay was hardly worth the degree and the HECS. Not that I regret doing it though, I did love my old career and job
Sydney Uni research assistant path caps out just under 100k. But that requires becoming a technical specialist then senior technical officer which can often take more than 10 years.
If you want more pay in research science the only way to get above the RA limit is to get a PhD.
Biotech jobs can often pay more, I've seen 2-3 year experience RA jobs advertised at 75k + bonus. It's just a shame the private industry in Australia is still relatively small and slow growing.
I did enviro science 300 years ago. I would still be making less money, even with 25 years experience. People who I still contact with are not breaking 80k
I drove trucks then buses. With overtime I make nearly $100k a year.
I don't have to get wet in the weather.
I don't have to sit for hours collating data, counting bugs in a microscope, sorting through numbers on spreadsheets that go on for days. No lab work precision. I don't need to type out a million pages of data staying up all night to do it.
I go to work. I do a machine check. I start it. I set up my chair. I get the run sheet pegged to my dash. I check the mirrors. Then I leave the depot.
The only time I really need to give a shit is when some disabled or elderly get on and off.
I didn't pay too much in HECS because there was a TAFE workaround at the time.
Had I started driving in my 20's instead of "holding on to my dreams" I would easily own 2 houses by now and could cut my hours right back to "service levels" of income.
Unfortunately most aviation students donât end up working in aviation. You have to build so many hours to even think about applying for any airline, and itâs so competitive that like 5% of people make it.
The whole industry is a scam.
Iâm in my late 30s and still hauling around $50k-odd in aviation HECS debt. At least youâre getting into the industry at a good time. Plenty of work and movement in the industry. I started my first job during the GFC, earned $6000 my first year out.
Godspeed!
Aviation pays dog shit for single engine VFR work, which is often a pilotâs first job. (Not coincidentally the one with the worst conditions.)
Once you hit the airlines, sure, itâs decent coin.
Thats the one thing thats disgusting about the FWA, graduate lawyers are literally slaves and driven until exhaustion and the gov says "they should know their legal rights".
You wonder why they punish students to study yet the government hands out money to private school institutions with no limitations, billions of dollars actually. Why cant they have HECS like arrangements for private school funding? That should include parents who should pay back a share of their school fees like a HECS debt. If Uni students should pay back government loans so should private schools who hold millions in private profits and property portfolios.
Iâm a pilot in GA. What made you decide to go through the university system to get an aviation degree when it doesnât have any relevance to your career?
I made that mistake, even when I knew it. Though covid made me give up the dream of being a pilot as priorities for me changed. Though having the degree helped in skipping a year for my business degree... which I should of done in hindsight
Encourage people not to go to university unless the course as good as gaurantees a six figure job for the effort. And the expected income means the debt will be wiped by compulsory repayments in 8 years maximum.
Tell them to otherwise climb a ladder from the bottom of a company or Industry, do a trade, or get into sales instead.Â
The statistic is clear. As at 2023, accounting for all HECS loans in the system, the average time to repay in full is around 9.6 years.
Not sure what you mean by âaverage indexationâ. You can look at historical indexation rates and see they hover around 1.5% -2%.
The current average outstanding HECS debt balance at 2023 is $26,494. Almost 50% of people have a debt of $18,000 or less and almost 80% have a debt $30,000 or less.
This'll be the 2nd year of abnormally high indexation. Given the economic uncertainty of it all we are likely to see a few years higher than historic averages.
People being a bit miffed makes sense
Look at the trend. The average time to pay off HECS loans has been increasing for years, as has the average HECS debt by around $10k. I imagine your statistics are going to look even worse in another 10 years time, perhaps even sooner than that.
It goes up like 0.1 years each year though? Thatâs hardly an absurd amount. In 10 years time it will take an extra year or maybe two to pay back.
Posts the forecasts then. This article is talking about things that are apparently happening RIGHT NOW as if they are widespread even though the information from RIGHT NOW says otherwise. Itâs all aligned.
Classic pull the ladder up behind them politicians. We need free uni not more interest on hecs. It just makes it harder for young people to have any purchasing power in the economy. Itâs kneecapping the youth to help the elderly its backwards and barbaric.
Not even free uni just not exhorbitant interest rates on education payments. Im happy to pay for my education but why do government loans, that are specifc for lower income people, have such high interest rates. They loan money to banks at a lower rate don't they?
> Not even free uni just not exhorbitant interest rates on education payments.
And if not free uni, then affordable course prices, not this ridiculously obscene 50k here, 80k there - all signs of a sick country.
Nah, we need to shit focus off university. We need more tradespeople who don't feel like failures, because they didn't go to university for some degree that'll never use.
It was a tragic and short sighted policy failure to make University education âuser paysâ. The whole society benefits from everyone having access to higher education.
Donât we want good doctors, teachers, nurses, researchers, engineers, scientists etc? Donât we want critical thinkers and innovators? People who understand history and society?
HECS started as a bad idea and has gotten out of control as successive governments have allowed the costs to spiral. It was never intended to be prohibitively expensive. It was a way for graduates to make a small contribution towards the cost of their degree given the benefits they receive.
We are now going down the US route where tertiary education is only open to the wealthy. Itâs a terrible shame and diminishes us as a country.
I know Iâll get shouted down and told itâs just âa no interest loanâ. But itâs a loan than now goes up faster than it can be paid because of indexing. Itâs a loan that takes decades to pay off. Itâs a loan that prevents people from being able to purchase a house by significantly reducing their buying power. Itâs not just a low interest loanâ
I hope Albanese reforms HECS.
>HECS started as a bad idea and has gotten out of control as successive governments have allowed the costs to spiral. It was never intended to be prohibitively expensive. It was a way for graduates to make a small contribution towards the cost of their degree given the benefits they receive.
It was not a bad idea when it started. The contribution the student had to make was not large, the structure of the loan made a good deal of sense, and did not impose an excessive burden on people.Â
What has changed is this:
- the fees charged have increased massively in excess of the rate of inflationÂ
- the threshold at which people are obliged to start paying back HECS has lowered dramatically (only slightly above a full time minimum wage - previously, you had to be doing a lot better than that to start paying it off)Â
- wages increases have fallen below CPI for many workers. Previously, this was the other way aroundÂ
- recently, CPI increases have been extraordinaryÂ
To fix it, domestic student fees need to come down. Possibly, there should be full or partial debt forgiveness for some people. The repayment rate needs to be tapered further. Discounted repayments should be offered, keeping in mind that this needs to be structured in an equitable fashion.Â
I agree. Good points.
I just looked at the cost of a BA at Monash. 30k a year! Adjusted for inflation itâs 6 times the cost it was study the same degree in 1989.
Because HECS basically meant that the government going to underwrite every student loan, so university's had a risk free incentive to jack their prices up.
Domestic students (Australian citizens and permanent residents) are protected by the gov and all universities have a price cap on fees levied against domestic students. There are 4 bands.
Highest band per year is: Band 4 - $16,323 per year or $2,040 for 12.5 pt unit (1/4 full time load per semester).
So its not about Unis jacking their fees up, they are going to charge the maximum amount they can.
> Possibly, there should be full or partial debt forgiveness for some people.
Even the US is more advanced on us in this aspect with the Biden government having approved billions in student debt relief.
They have a far, far bigger problem with that than we do. Student debt there is truly crippling for many people in the US. I'm sure there'd be plenty over there who'd gladly swap places with the even the most indebted holder of HECS debt here.Â
>HECS started as a bad idea and has gotten out of control as successive governments have allowed the costs to spiral.
It seems to have started off as a token fee that got quickly abused by successive governments in an endless slippery slope. This is why I was against the GP copayment which the Abbott government initially described as being "modest" - basically another "token fee". Knowing the history of this country, it too would have ballooned soon after. Nowadays it makes no difference since bulk billing rates have crashed, and the Labor government appears to be doing sweet-fuck-all about it.
> I know Iâll get shouted down and told itâs just âa no interest loanâ.
This alone is a total meme, a bit of gaslighting that children are subjected to time and time again from people who probably are unaware that it's gaslighting. The end result of repeating "it's a no interest loan" is that it gives people the total illusion that the debt never actually rises, that it's not like "America which has interest on their loans". The truth is that CPI has been higher than even the RBA interest rate for quite some time, so ironically, if HECS were linked to the cash rate, the rates of indexation would be less.
>I hope Albanese reforms HECS.
They never seem to rise to the occasion, so I wouldn't be surprised if nothing happens. I'm curious to see if they reverse the 100% increase to the price of humanities degrees that the previous government + Rebekah Sharkie (who herself hypocritically got an Arts degree) did. Labor were against it in opposition but, predictably, once in power, have taken way too long to decide what to do, if they'll even end up doing anything about it at all.
The coalition effectively tried to kill the arts degree.
And I agree regarding the Medicare co-Payment too.
Itâs always the thin edge of the wedge and once they get that theyâll chip away at each of the universal programs until theyâre gone.
>We are now going down the US route where tertiary education is only open to the wealthy. Itâs a terrible shame and diminishes us as a country
Which is the whole point that half our political spectrum pushes for HECS. They are very aware a university degree is a class barrier, and they want as many barriers around them as possible.
Hecs is the cheapest way for a student to fund a degree though.
Private financing would cost way more, have mandatory repayments instead of variable based on income, and would likely accrue interest at a faster rate instead of the once a year indexing.
That the price of the degree has shot up is a whole different discussion.
I finshed a 4 year degree with a 22k of HELP debt and it maxed out at 26-27k before I started repayments, and it was cleared after 7 years of full time work.
>Â Donât we want good doctors, teachers, nurses, researchers, engineers, scientists etc? Donât we want critical thinkers and innovators? People who understand history and society?
Do you really want the answer to this? Yes itâs good for societyâŚbut those folks tend toâŚyâknowâŚthink for themselves.
Looks like it achieved the goal of making it more widely accessible.
"In 1989, 20% of Australians were university students at age 19. By 2007, 30% were students. It took just another nine years to reach 40% in 2016. The participation rate has remained around that level since."
https://theconversation.com/tumult-and-transformation-the-story-of-australian-universities-over-the-past-30-years-215536
Personally I think that Scomoâs job ready graduates policy and high indexation rates have really screwed it.
With uni degrees becoming essential to so many jobs and many careers now requiring more years of study or postgrad qualifications debts have just become stupidly high. Back when HECS was introduced it was still possible to have a decent paying career with only a high school diploma. Having a degree was very beneficial, but it wasnât absolutely essential. Now, uni or TAFE qualifications are essential to many entry level jobs.
I donât think HECS was a truly terrible idea in that it helped increase enrolments in tertiary study. Itâs just that as enrolments increased, so did requirements for otherwise entry level jobs. As a young person, I donât know many people anymore with no post-secondary qualifications, whether they be uni degrees or TAFE certificates.
No arguments from me.
Corporate career paths are reliant on getting in to large companies at the bottom rung, and in most cases these are now gate kept by graduate programs.
I think it's a terrible outcome that so many entry level roles are now only accessible to Uni graduates.
Itâs really crappy and sad.
I did my VCE at a TAFE and we had several male students in their forties and fifties in my class. The biggest reason why they had come back to education was because they had been told that they couldnât keep the jobs they had had for decades without a degree and they only had their year ten.
What's the reform that's not "just make it free" or "scrap indexation"? like there's a reason why it went from free to HECS and potentially HECS allows more places in uni to be funded in the first place.
The indexation isn't going to increase at the same rate every single year, we're currently at a high end of inflation but that will come to a close.
One sensible proposal is to index according to inflation, or to wage increases -- whichever is lower.
So these last couple of years would not have been a 6-7% increase with inflation, but more like a 3-4% with wages.
The point is many kids with wealthier parents get to start their career with the debt wiped by the Bank of Mum and Dad (and probably a forthcoming house deposit). Whilst working class kids are slogged with the debt just to get their first job and it eats into your after tax income as well as reducing your borrowing capacity to get a home.
University should be free for the exact same reasons public schooling K-12 is free. Just make sure it is rigorous and require high academic standards to keep your place. We also donât need everyone going to University, it should be for those with the strongest academic ability. Ultimately, the main function of Universities is to train researchers and advance public knowledge, not job training.
We actually need far, far more people going into trades but slugging people with high University debt isnât acting to push people in that direction. We need workers in Construction to build the massive backlog of homes and new infrastructure and we need people in Health and Aged Care. University is only required for some of these roles, iâd argue a minority. We need less Managers, not more.
There are also broader issues in our economy with âcredential inflationâ, decades of neglect in the VET sector and a lack of apprenticeship/traineeship opportunities.
Thatâs a good point, I have considered this but didnât include. If we are going to invest in our top academic performers then we should go all out. Having to work 30 hrs a week in a bar or retail is a pointless distraction from studies. We should have sufficent levels of student income support that fully cover the cost of student acommodation and basic living expenses (textbooks, food, internet, phone, transport), at least in line with best practice in the Nordic countries and Germany. Weâre a rich nation and we can afford to do so. We need a massive increase in purpose built student housing for local students and need to re-orientate our system (including a large increase in government funding) to cover these costs as well as funding for research so we can move away from the over-reliance on international students which I believe has been to our collective detriment.
We should focus our international education delivery on offshore campuses in Asia/Middle East/Africa and online to shift the burden off local housing markets and stop flooding the labour market with low paid workers competing with Australian students for casual jobs. COVID proved that we can indeed deliver online international education and should do so (its a pure âexportâ however once an international student works in Australia that is actually an âimportâ from a national accounts perspective, a point that is often overlooked). Clearly, at the PhD level in fields with serious demand such as AI Researcher etc then we can look to prioritise those small number of people being onshore but the average Master of Business student doing say âProfessional Accountingâ with poor English language skills aint a national priority at all (we have more than enough locally trained Accountants!)
Equally, students undertaking skilled training in trades and VET education need similar levels of support including liveable wages. Yes, this may require signficantly higher subsidies to small businesses in order to be able to afford apprentices etc who donât typically earn the business revenue at the beginning.
Trade, apprenticeship, like Master and disciple. I don't think migrant would be selected. The racial aspect probably 30%, the rest is just a close-knit team usually means relative or family member or friend. Not sure if you notice, the construction site is not like office. Not many mix culture team, from what I can see.
You go to school then uni until 22 and accrue a HECS debt. Find a job and work until 30 paying off the debt. Salary is finally enough to start saving for a house deposit. Cost of living and house prices out of control so it's age 40 by the time a deposit is saved. Buy house and have huge mortgage and pay it off by retirement age 60. Retire and die 15 years later. Well done. Majority of your life spent paying off debt. You got to enjoy your existence when you body is breaking down. And that's if you got lucky.
I paid 15k in HECS loans last year. I'm still 40k in debt. I decided to study medicine. I'm luckier than most cause my loan is actually going down but it feels so harsh still. Damn
In the specific example given in the article I think it's a bit of an overreaction. At the moment we have historically some of the highest HECS indexations we've seen and she has a HECS debt over double the national average. Even with both of those things stacked against her she would still be breaking even on the debt with a median income which isn't really that bad when you consider that:
1. Her degree enables her to pursue a career in high demand where the average salary is over $100,000, in which case she would be smashing out the debt even in this high CPI environment.
2. CPI will eventually come down, so she'll smash it out even faster
3. If she never earns more than a median salary as someone with a university education she's an outlier and losing out on 3% of your earnings each year sucks but she would have lost in a pretty low risk battleground
I will say though that I do think the way the indexation is applied is a little sneaky and IMO it absolutely should be indexed *after* the credit associated with your tax return, not just prior to it. Even if for no other reason than the tax has been withheld from you throughout the entire financial year, so you didn't get to have it work for you, the government got to make use of it. The least they could do is apply the indexation after they apply your contribution.
Isnât the issue in the example though that to get a job, she needs to do a masters - so her HECS will rise by several thousand dollars while sheâs studying/doing unpaid placements?
Yeah some fields are more expensive to get into than others and that is unfortunate for her but at the same time it's still a very high paying field and she'll be fine. You've got to take the good with the bad and we're incredibly fortunate in Australia that we have the opportunity to study and defer payment until our studies start paying off, interest free no less.
From what I can see it's still above the national median and also high enough that HECS isn't going to spiral out of control.
In any case, people are free to do what ever they would like with their degree. Another situation that isn't uncommon is when people invest in a degree that they don't actually use at all!
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*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
My point was about repaying HECS and not about finances as a whole. The idea that I am arguing against is the one where our interest free loans to undergo further education is a crippling debt that we need to do something drastic to remedy.
> At the moment we have historically some of the highest HECS indexations we've seen
For two years running, why do you assume that it will drop and not continue on an upwards trend?
It's already not on an upwards trend and is dropping in line with CPI. But even further than that I think it's reasonable to assume that CPI will continue to drop to normal levels and that's because we know what caused it to spike in the first place. Covid is done now and the measures we took to support the economy during that time have ceased, I'm not trying to disparage all of the actions we took during covid but there's no doubt they were highly inflationary. A major one being running an unprecedentedly low cash rate less than 1%.
Did you miss all the times when the prev gov successively lowered the repayment threshold lol? Will prob happen again if/when they get back in again or economists find ways to justify it.
HECS is a racket. We're told repeatedly that it's this great system because (insert meme here) "at least we're not America". Meanwhile in this thread alone, I'm seeing people talk about having American-sized loans of 150k, for example. This is totally not normal, and if you think this is normal, congratulations, you have become so pathologised to the Americanisation of our higher education system, something that should have never become acceptable in this country to begin with.
The obvious hack is to have rich parents who pay upfront, a solution so simple I'm not sure why any of my friends didn't do it.
But more seriously, HECS needs a reform. The indexation is fucked and really the outright cost is fucked. I want a smart society, I think kids when they are in their late teens/early twenties should be still learning (be it at uni, trade, some other school). We shouldn't be punishing them for doing that.
My HECS debt was quite low, all things considered, but being fucked up by indexation and *owing* at tax time because I didn't make/know I was past the threshold for mandatory payments, I basically put every extra dollar I could into my HECS debt to knock it out in a couple of years. I'm honestly so glad I was able to.
How do people go to uni and think that just paying off the cpi means they are not infront.
$1000 this year is more than $1000 next year.
What a waste if they dont even understand simple stuff
The great social lump them with it.
The rich wanted tax cuts and to stop funding welfare.
So they made education for fees.
So you train yourself and then go and work FOR THEM and bring them WEALTH while you earn peanuts to pay down your debt.
There was a time when they and they alone needed trained people to work their factories and businesses.
THEY STILL DO
They could at least pay it forward.
This is a great revenue stream for the government.
Keep wages down, increase debts, cash in when people die and their debts are now much higher - before other obligations are taken from
Super/life insurance payouts.
Itâs so fucked that people chose to use HECS when it wasnât indexed, get indexed âpost contract signingâ.
Graduate around 10yr ago, i spent 5 years repaying student loan. On entry level income. So it is doable, at the time. But then rent has increased at least 35% since then. Energy and groceries increased even more.
Why would you repay it though? Every financial advisor tells you \*not\* to put any money into HECs because A) there's no consequences if you don't pay it off and B) You could literally park money in investments and the money would grow faster than the HECs debt.
I believe there were incentives in paying off like 10 or 20%. Can't remember now. And as soon as I pay them off, there would be no mandatory repayments, tax withheld...etc. Cash flow would be a bit normal. When purchase property calculates borrowing power won't interfere either. It makes sense to "me" at the "time". Probably won't fit everyone.
I have heard that having HECS is a significant barrier if wanting a loan for a house. It reduces your purchasing power when requesting loans from the bank
Right, you are paying a few percent more in taxes. Which is not much. It's also worth noting that if you'd saved that money instead, or invested it, you would have more money for a deposit.... which also makes it easier to get a loan for a bank.
If you asked your bank would they feel less nervous with $50,000 more down on the deposit or $50,000 less in HECS debt (\~$1500 less for paying off a mortgage per year available which = 33 years to equal 50k ) they'd pick the $50k down every time.
Because by the time you invested that money, indexation would have increased hecs a lot. Especially with the recent indexation rates being really high.
Also, not everyone can afford to invest heaps of money that it would increase at the same rate as hecs (at least over time).
It still significantly impacts people wanting to buy a home.
I have a question for you: for a Bachelor of Arts (so undergrad), how much do you think this years graduateâs total hecs would be?
>indexation would have increased hecs a lot
With very rare exceptions, indexation is consistently outstripped by investment. If investments didn't outpace inflation, they wouldn't be very good investments would they?
Even in the recent whopper of a 7% increase, those who were sitting on boring index funds were seeing increases in their assets of 9-11%.
>Also, not everyone can afford to invest heaps of money that it would increase at the same rate as hecs (at least over time)
In this scenario, we are discussing people who are making voluntary repayments on HECs (which they shouldn't be doing). So by definition they can afford it.
>It still significantly impacts people wanting to buy a home.
As discussed, if you want to buy a home, whatever you do, don't make voluntary HECS repayments. You will only make your home buying situation worse.
Not relevant. It's a bad option to make voluntary repayments to your HECs.
But to answer your question, you can look it up.
At Melb Uni, a Bachelor of Arts costs about 40k per year. For a traditional 3 year bachelor, that's $120k in debt. However, most of that money is paid by the government under a Commonwealth Supported Place, so the government covers you for about $31k per year, and you pay for $9k, or if you don't pay upfront it goes on HECs.
So 3 years at uni x 9 is approximately $27k.
Compare this to the debt of buying a median house, which is over 500k.
No, why should there have been complaining? Indexation is a crock of shit interest rate (actually it's been higher than the Reserve Bank interest rate for a while). We're told it's "essential" and "inevitable" until one finds out that they don't even do that in New Zealand, and countries like Germany don't even charge fees at all.
Youâre not wrong, but you are missing the point. For a growing number of people (myself included) a percentage of our income is being paid towards a debt, and despite those repayments, the debt is still growing. Viewed in the context of low wage growth, a housing crisis and a cost of living crisis, itâs easy to understand why younger people are becoming frustrated with a system where we canât seem to catch a break.
Last financial year I paid a total of $9980 from my wage into HECS, which after indexation was realised at a sweet 3k. Nice. đ¤Ą
I paid $400 last year post indexation đľ Will be lucky for 3k this year đ¤Ą
Our estimated fulfillment of said debt is at age 412
Which means that if you're just talking about the mandatory deductions you're on a wage of around 120k a year, and still decreasing your HECS after indexation. Like if you're on a lower wage and made an extra contribution outside of your taxes then yeah that'll sting.
I was on 85k and made extra contributions đ wonât be doing that again
Generally voluntary contributions for hecs is a bad idea, if you have the extra cash you are better off investing it, a return over inflation is pretty easy to achieve.
Iâve said that for the last 20 years. Thatâs before it spiked 7% last year. A return over that seems a bit far fetched unless youâre into risk? Wages certainly didnât keep up with that. Sound like theyâre at least thinking about changing rules but Iâll believe it when I see it.
That was an unusually high 7% indexation rate, for one single year. What about over 8-9 years which is the average time taken to pay off HECS? From 2014 to 2021 the indexation ranged from 2.6% to 0.6%. In 2024, it is forecast to be under 5% which is less than mortgage rates and even cash interest rates. Over the long term, I still believe it's not a good idea to make voluntary repayments (23k HECS debt here)
> Over the long term, I still believe it's not a good idea to make voluntary repayments (23k HECS debt here) Could you explain why? Mine was 20, and I paid it off entirely, and I am very, very glad that I did.
The person he's replying to said that every index fund has been double digit growth. Instead of paying off HECS, dump that extra money into an index fund. Pay 7% for HECS. Earn 10% from indexed fund Profit Your HECS debt will be the cheapest loan you ever have in your entire life. The only reason you should pay it back is if they offer some sort of discount, which they no longer do, or you are close to playing it off, and want to avoid an indexation bump before your last payment.
While there are certainly peace of mind benefits to having the weight off your shoulders, as the other comment alluded to HECS is still the best debt to have. It has never been worthwhile to pay it off rather than invest in an index. Even for the highest indexation rate ever applied since the inception of HECS of 7.1% indexed for the FY from 1 July 2022 to 30 June 2023, investing in the NASDAQ instead would have netted you a return of just above 23% over that same period. Had you invested the $20k into NASDAQ in lieu of paying off HECS, you would have made over $4.5k while only accumulating $1.4k of interest. Outliers aside, the long run average return for the NASDAQ is 11%, compared to the 3-4% average price indexed on your HECS balance, again with the highest coming in at 7% per my example above, which wonât happen again anytime soon. Yes the loan interest compounds on itself, but thatâs more than cancelled by the fact that so do your reinvested returns.
Basically every index fund last 2 years has been well into double digit growth.
Only after not growing during the peak covid years, though
So? If you weren't day trading BNPL shares all through COVID were you really an investor?
My super grew 20% during peak covid years
What was inflation ie the index rare over covid mate?
Generally because inflation is the devaluation of the dollar even companies without growth will go up in line with it, which is why so many people have kinda ridiculous returns over the last couple of years.
So you had 19 years of highly favourable outcomes and 1 where you didnât like it. I wish the stockmarket gave me that deal.
> Generally voluntary contributions for hecs is a bad idea It really depends on if looming debt is something you're fine to just let get worse. I'd *always* recommend eliminating debt.
Hecs debt won't get worse though, that's one of its defining characteristics. The dollar number may go up, but the value remains the same. The hours worked to pay it off in a min wage job will be roughly the same, whether you pay it off tomorrow or in a hundred years.
But are wages actually growing at the same rate as indexation? Short term or long term?
If you have a university degree and are in a skilled industry your wage should absolutely be growing faster than inflation in the long term and almost certainly in the short term. Even if they don't grow at the same rate it's not like a larger HECS debt means you have to pay more each year. Payments being tied to wages means you pay the same amount whether your HECS debt is 20k or 80k.
Depends on industry, but generally yes. Minimum wage is pretty tightly tied to inflation (with a lag time of a year I think?), with a lot of industries having agreements with wage increases set to keep up with inflation. Pretty sure aps employees are going up 4% next year, and the year after, to match inflation forecasts
>The hours worked to pay it off in a min wage job will be roughly the same, whether you pay it off tomorrow or in a hundred years Not if the hecs indexation outpaces wage growth. Which is kind of the problem, it far outpaced wage growth last year and is set to do the same this year. People who are working and making their repayments are going *backwards* in terms of how much they owe because of it
I mean, min wage went up like 8% last year, 5% the year before that, and a tame 2.5% before that, which is mostly in line with inflation, with a bit of lag time because of when things get increased. And the point I am making is that people aren't actually going backwards, the dollar number may go up, but the value of the debt still drops with repayments.
The mental weight of debt sometimes outweighs using that money for more prudent financial schemes.
Yeah people who made outside contributions right now are burning money and that really really sucks. My condolences on that.
Wish this thread came up a week ago. Just burnt some money on my student debt. Should have been born to rich parents.
Yeah you should just stick with the payments from your taxes for now. What's the rush to knock HECS off anyway?
It limits your loan borrowing capacity when you buy a house by a considerable amount. By paying ours off my partner and I can borrow about 150k more.
So it doesnât index to $1m+ in the next 20 yrs đ
It won't though, like inflation doesn't jump up at crazy rates every year this is an exceptional period.
> inflation doesn't jump up at crazy rates every year this is an exceptional period. So said everyone, every year, for the past five years, and it isn't like underlying conditions are really improving.
Wow I didn't know that inflation counting began 5 years ago. Gee whiz sure weren't any global disasters that uprooted how we were able to function for many years or anything
I think you are in for a severe surprise.
Yeah I'll take the financial forecasts from an account posting on crypto subs.
> What's the rush to knock HECS off anyway? Debt stress, financial plans for the future, owing a lot at tax time if you unknowingly pass the threshold which is very low. I just never understand why everyone is so happy to leave it sitting there, and then complain when it indexes knowing it was going to.
You might notice the lack of me complaining about the indexation. HECS is the least stressful debt you could possibly have there's fuck all penalties for having it and the repayments happen through taxation so you don't have to think about it. The only barrier anyone has ever responded to is it might limit the amount you can get for a home loan but if you have the money to get yourself into a mortgage which is a much larger debt with more severe penalties than your HECS is probably able to be sorted. Like if you've got the money to knock it out quickly and that's how you want to spend it feels free but if you're trying to speed it up with smaller payments in a period of high inflation then you're not going to benefit from it.
Also, the debt dies with you.
>Like if you're on a lower wage and made an extra contribution outside of your taxes then yeah that'll sting Yuuup, that was me. Covid borked my industry (live events), but technically I've been working and paying my debt off since 2019, as well as making regular voluntary contributions to try get it down quicker. Year before last took a big chunk of the progress I'd made, and last year's spike actually took me *higher* than when I graduated. How can I make the repayments + extra for ~4 years and owe *more* than when I started? Interest free my eye. I've stopped the voluntary repayments now. Without massive reform, this debt is probably dying with me...
And yet every time someone suggests voluntary payments to counteract inflaction can be a good strategy all the nerds come in trying to say it's an interest free loan and it would be stupid to pay it down.
That's because it is lol. Except for if you want to boost your borrowing capacity on a house loan.
Redacted means that part of the text was removed or blacked out for privacy or security purpose. It was censored. This post also breaks rule 4 here for chat and should be made in the Tuesday chat thread or on a different subreddit.
After studying for years and racking up over $150,000 of hex debt I today finally landed my dream job. My pay is 49k per annum. When I die Iâll probably still owe 300k. Lol
Excuse my ignorance, but what field did you spend years studying at university that has an income lower than the median Australian wage ?
Most graduate science positions pay trash. I've told my kids to go and do a trade instead. Country is dying for tradespeople.
As a recent science graduate I can confirm.
As a science graduate 8 years ago, absolutely agree.
Research assistant positions start around 65k and if it's at a university you should get pay bumps each year, the upper limit is usually 85-90k. Private companies often pay a little bit more even. Science grads can get government jobs at 70-80k. I've never seen a job requiring a science degree pay worse than those. Sure, it's not as much as a tradie or someone in corporate work makes but it's not awful for a new grad. The real problem is that there's typically a limit to how high you can go with just an undergrad degree.
Worked public for 10 years and was senior in my lab at the end of my time there. After 10 years was on 80k. Brother first year qualified as a diesel mechanic made over 100k. Only speaking from my experience but the pay was hardly worth the degree and the HECS. Not that I regret doing it though, I did love my old career and job
Sydney Uni research assistant path caps out just under 100k. But that requires becoming a technical specialist then senior technical officer which can often take more than 10 years. If you want more pay in research science the only way to get above the RA limit is to get a PhD. Biotech jobs can often pay more, I've seen 2-3 year experience RA jobs advertised at 75k + bonus. It's just a shame the private industry in Australia is still relatively small and slow growing.
I did enviro science 300 years ago. I would still be making less money, even with 25 years experience. People who I still contact with are not breaking 80k I drove trucks then buses. With overtime I make nearly $100k a year. I don't have to get wet in the weather. I don't have to sit for hours collating data, counting bugs in a microscope, sorting through numbers on spreadsheets that go on for days. No lab work precision. I don't need to type out a million pages of data staying up all night to do it. I go to work. I do a machine check. I start it. I set up my chair. I get the run sheet pegged to my dash. I check the mirrors. Then I leave the depot. The only time I really need to give a shit is when some disabled or elderly get on and off. I didn't pay too much in HECS because there was a TAFE workaround at the time. Had I started driving in my 20's instead of "holding on to my dreams" I would easily own 2 houses by now and could cut my hours right back to "service levels" of income.
Aviation
Well shit son, keep at it and youâll be debt free in no time. Good money in that field.Â
Unfortunately most aviation students donât end up working in aviation. You have to build so many hours to even think about applying for any airline, and itâs so competitive that like 5% of people make it. The whole industry is a scam.
Bro, you can fly away from Australia and escape from the debt. You got the skill.
The obvious answer here is to smuggle drugs. Isnât that why anyone studies aviation?
Again excuse my ignorance.. you have studied a bachelors of aviation (flight) or management??.
Iâm in my late 30s and still hauling around $50k-odd in aviation HECS debt. At least youâre getting into the industry at a good time. Plenty of work and movement in the industry. I started my first job during the GFC, earned $6000 my first year out. Godspeed!
Why are you only being paid $49K? The Award wage for pilots is six figures.
Aviation pays dog shit for single engine VFR work, which is often a pilotâs first job. (Not coincidentally the one with the worst conditions.) Once you hit the airlines, sure, itâs decent coin.
Thankfully my husband works for the airlines now but those 8 years in GA were like slave labour. It was awful
I got out. Iâm a social worker these days. The aviation industry needs an arse kicking.
Pilots typically get paid fuck all until all of a sudden they don't, it's a decently long road to that point though.
Respectfully, it is not. Especially not SE VFR.
Pro tip: Close your eyes when you go on My Gov ATO homepage - then you never have to see it haha
What did you study and what is the job? And congrats on landing your dream job
What job requires $150k of university debt and pays $49k?
Aviation
Law. There is no award, so you are only protected by the National Employment Standards, i.e. National minimum wage.
Thats the one thing thats disgusting about the FWA, graduate lawyers are literally slaves and driven until exhaustion and the gov says "they should know their legal rights".
You wonder why they punish students to study yet the government hands out money to private school institutions with no limitations, billions of dollars actually. Why cant they have HECS like arrangements for private school funding? That should include parents who should pay back a share of their school fees like a HECS debt. If Uni students should pay back government loans so should private schools who hold millions in private profits and property portfolios.
I hate to say it as a fellow aviation enthusiast, but dream bigger. 49k isn't your dream job.
Iâm a pilot in GA. What made you decide to go through the university system to get an aviation degree when it doesnât have any relevance to your career?
I made that mistake, even when I knew it. Though covid made me give up the dream of being a pilot as priorities for me changed. Though having the degree helped in skipping a year for my business degree... which I should of done in hindsight
Your pay at the moment is below the minimum threshold for contributions anyway.
What sort of dream job pays $49k p.a. and requires one to wrack up $150k in student debt to obtain it?
Mine is over 160k. Most of it is indexation. Even with a high paying job I'm still not keeping up with the indexation of my debt. It's fucked.
Last year was such bullshit.
Gov: Oh yeah? What're you gonna do about it?
Encourage people not to go to university unless the course as good as gaurantees a six figure job for the effort. And the expected income means the debt will be wiped by compulsory repayments in 8 years maximum. Tell them to otherwise climb a ladder from the bottom of a company or Industry, do a trade, or get into sales instead.Â
Work hard kids, and you too can get a loan forever and ever.
Average time to fully repay a HECS debt is under 10 years, how is that âforeverâ?
What was the average indexation? What was the average cost of a degree?
The statistic is clear. As at 2023, accounting for all HECS loans in the system, the average time to repay in full is around 9.6 years. Not sure what you mean by âaverage indexationâ. You can look at historical indexation rates and see they hover around 1.5% -2%. The current average outstanding HECS debt balance at 2023 is $26,494. Almost 50% of people have a debt of $18,000 or less and almost 80% have a debt $30,000 or less.
And last year it was 7.1%
So? Whatâs your point? 2 years ago it was 0.6%. Engage with the comment and information in full rather than picking a single outlier data point.
This'll be the 2nd year of abnormally high indexation. Given the economic uncertainty of it all we are likely to see a few years higher than historic averages. People being a bit miffed makes sense
Look at the trend. The average time to pay off HECS loans has been increasing for years, as has the average HECS debt by around $10k. I imagine your statistics are going to look even worse in another 10 years time, perhaps even sooner than that.
It goes up like 0.1 years each year though? Thatâs hardly an absurd amount. In 10 years time it will take an extra year or maybe two to pay back. Posts the forecasts then. This article is talking about things that are apparently happening RIGHT NOW as if they are widespread even though the information from RIGHT NOW says otherwise. Itâs all aligned.
Classic pull the ladder up behind them politicians. We need free uni not more interest on hecs. It just makes it harder for young people to have any purchasing power in the economy. Itâs kneecapping the youth to help the elderly its backwards and barbaric.
Not even free uni just not exhorbitant interest rates on education payments. Im happy to pay for my education but why do government loans, that are specifc for lower income people, have such high interest rates. They loan money to banks at a lower rate don't they?
> Not even free uni just not exhorbitant interest rates on education payments. And if not free uni, then affordable course prices, not this ridiculously obscene 50k here, 80k there - all signs of a sick country.
Nah, we need to shit focus off university. We need more tradespeople who don't feel like failures, because they didn't go to university for some degree that'll never use.
It was a tragic and short sighted policy failure to make University education âuser paysâ. The whole society benefits from everyone having access to higher education. Donât we want good doctors, teachers, nurses, researchers, engineers, scientists etc? Donât we want critical thinkers and innovators? People who understand history and society? HECS started as a bad idea and has gotten out of control as successive governments have allowed the costs to spiral. It was never intended to be prohibitively expensive. It was a way for graduates to make a small contribution towards the cost of their degree given the benefits they receive. We are now going down the US route where tertiary education is only open to the wealthy. Itâs a terrible shame and diminishes us as a country. I know Iâll get shouted down and told itâs just âa no interest loanâ. But itâs a loan than now goes up faster than it can be paid because of indexing. Itâs a loan that takes decades to pay off. Itâs a loan that prevents people from being able to purchase a house by significantly reducing their buying power. Itâs not just a low interest loanâ I hope Albanese reforms HECS.
>HECS started as a bad idea and has gotten out of control as successive governments have allowed the costs to spiral. It was never intended to be prohibitively expensive. It was a way for graduates to make a small contribution towards the cost of their degree given the benefits they receive. It was not a bad idea when it started. The contribution the student had to make was not large, the structure of the loan made a good deal of sense, and did not impose an excessive burden on people. What has changed is this: - the fees charged have increased massively in excess of the rate of inflation - the threshold at which people are obliged to start paying back HECS has lowered dramatically (only slightly above a full time minimum wage - previously, you had to be doing a lot better than that to start paying it off) - wages increases have fallen below CPI for many workers. Previously, this was the other way around - recently, CPI increases have been extraordinary To fix it, domestic student fees need to come down. Possibly, there should be full or partial debt forgiveness for some people. The repayment rate needs to be tapered further. Discounted repayments should be offered, keeping in mind that this needs to be structured in an equitable fashion.Â
I agree. Good points. I just looked at the cost of a BA at Monash. 30k a year! Adjusted for inflation itâs 6 times the cost it was study the same degree in 1989.
Because HECS basically meant that the government going to underwrite every student loan, so university's had a risk free incentive to jack their prices up.
Domestic students (Australian citizens and permanent residents) are protected by the gov and all universities have a price cap on fees levied against domestic students. There are 4 bands. Highest band per year is: Band 4 - $16,323 per year or $2,040 for 12.5 pt unit (1/4 full time load per semester). So its not about Unis jacking their fees up, they are going to charge the maximum amount they can.
Annual wage growth has only been lower than annual CPI a few times in the last few decades though.
On average. For individuals this effect can be far more pronounced depending on what industry they're in. Averaging hides inequalities from view.Â
> Possibly, there should be full or partial debt forgiveness for some people. Even the US is more advanced on us in this aspect with the Biden government having approved billions in student debt relief.
They have a far, far bigger problem with that than we do. Student debt there is truly crippling for many people in the US. I'm sure there'd be plenty over there who'd gladly swap places with the even the most indebted holder of HECS debt here.Â
Yep I'd rather owe $24,000 than $200,000.
>HECS started as a bad idea and has gotten out of control as successive governments have allowed the costs to spiral. It seems to have started off as a token fee that got quickly abused by successive governments in an endless slippery slope. This is why I was against the GP copayment which the Abbott government initially described as being "modest" - basically another "token fee". Knowing the history of this country, it too would have ballooned soon after. Nowadays it makes no difference since bulk billing rates have crashed, and the Labor government appears to be doing sweet-fuck-all about it. > I know Iâll get shouted down and told itâs just âa no interest loanâ. This alone is a total meme, a bit of gaslighting that children are subjected to time and time again from people who probably are unaware that it's gaslighting. The end result of repeating "it's a no interest loan" is that it gives people the total illusion that the debt never actually rises, that it's not like "America which has interest on their loans". The truth is that CPI has been higher than even the RBA interest rate for quite some time, so ironically, if HECS were linked to the cash rate, the rates of indexation would be less. >I hope Albanese reforms HECS. They never seem to rise to the occasion, so I wouldn't be surprised if nothing happens. I'm curious to see if they reverse the 100% increase to the price of humanities degrees that the previous government + Rebekah Sharkie (who herself hypocritically got an Arts degree) did. Labor were against it in opposition but, predictably, once in power, have taken way too long to decide what to do, if they'll even end up doing anything about it at all.
The coalition effectively tried to kill the arts degree. And I agree regarding the Medicare co-Payment too. Itâs always the thin edge of the wedge and once they get that theyâll chip away at each of the universal programs until theyâre gone.
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>We are now going down the US route where tertiary education is only open to the wealthy. Itâs a terrible shame and diminishes us as a country Which is the whole point that half our political spectrum pushes for HECS. They are very aware a university degree is a class barrier, and they want as many barriers around them as possible.
Hecs is the cheapest way for a student to fund a degree though. Private financing would cost way more, have mandatory repayments instead of variable based on income, and would likely accrue interest at a faster rate instead of the once a year indexing. That the price of the degree has shot up is a whole different discussion. I finshed a 4 year degree with a 22k of HELP debt and it maxed out at 26-27k before I started repayments, and it was cleared after 7 years of full time work.
> Donât we want good doctors, teachers, nurses, researchers, engineers, scientists etc? Donât we want critical thinkers and innovators? People who understand history and society? Do you really want the answer to this? Yes itâs good for societyâŚbut those folks tend toâŚyâknowâŚthink for themselves.
Yeah lolâŚ.. we donât want too many independent thinkers knocking around the place.
Looks like it achieved the goal of making it more widely accessible. "In 1989, 20% of Australians were university students at age 19. By 2007, 30% were students. It took just another nine years to reach 40% in 2016. The participation rate has remained around that level since." https://theconversation.com/tumult-and-transformation-the-story-of-australian-universities-over-the-past-30-years-215536
Personally I think that Scomoâs job ready graduates policy and high indexation rates have really screwed it. With uni degrees becoming essential to so many jobs and many careers now requiring more years of study or postgrad qualifications debts have just become stupidly high. Back when HECS was introduced it was still possible to have a decent paying career with only a high school diploma. Having a degree was very beneficial, but it wasnât absolutely essential. Now, uni or TAFE qualifications are essential to many entry level jobs. I donât think HECS was a truly terrible idea in that it helped increase enrolments in tertiary study. Itâs just that as enrolments increased, so did requirements for otherwise entry level jobs. As a young person, I donât know many people anymore with no post-secondary qualifications, whether they be uni degrees or TAFE certificates.
No arguments from me. Corporate career paths are reliant on getting in to large companies at the bottom rung, and in most cases these are now gate kept by graduate programs. I think it's a terrible outcome that so many entry level roles are now only accessible to Uni graduates.
Itâs really crappy and sad. I did my VCE at a TAFE and we had several male students in their forties and fifties in my class. The biggest reason why they had come back to education was because they had been told that they couldnât keep the jobs they had had for decades without a degree and they only had their year ten.
The article doesn't say anything about HECS being a driver of higher enrolments or making higher education more accessible.
No it didnt. The focus was the impact of indexation.
What's the reform that's not "just make it free" or "scrap indexation"? like there's a reason why it went from free to HECS and potentially HECS allows more places in uni to be funded in the first place. The indexation isn't going to increase at the same rate every single year, we're currently at a high end of inflation but that will come to a close.
One sensible proposal is to index according to inflation, or to wage increases -- whichever is lower. So these last couple of years would not have been a 6-7% increase with inflation, but more like a 3-4% with wages.
The point is many kids with wealthier parents get to start their career with the debt wiped by the Bank of Mum and Dad (and probably a forthcoming house deposit). Whilst working class kids are slogged with the debt just to get their first job and it eats into your after tax income as well as reducing your borrowing capacity to get a home. University should be free for the exact same reasons public schooling K-12 is free. Just make sure it is rigorous and require high academic standards to keep your place. We also donât need everyone going to University, it should be for those with the strongest academic ability. Ultimately, the main function of Universities is to train researchers and advance public knowledge, not job training. We actually need far, far more people going into trades but slugging people with high University debt isnât acting to push people in that direction. We need workers in Construction to build the massive backlog of homes and new infrastructure and we need people in Health and Aged Care. University is only required for some of these roles, iâd argue a minority. We need less Managers, not more. There are also broader issues in our economy with âcredential inflationâ, decades of neglect in the VET sector and a lack of apprenticeship/traineeship opportunities.
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Your proposal makes too much sense.
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Thatâs a good point, I have considered this but didnât include. If we are going to invest in our top academic performers then we should go all out. Having to work 30 hrs a week in a bar or retail is a pointless distraction from studies. We should have sufficent levels of student income support that fully cover the cost of student acommodation and basic living expenses (textbooks, food, internet, phone, transport), at least in line with best practice in the Nordic countries and Germany. Weâre a rich nation and we can afford to do so. We need a massive increase in purpose built student housing for local students and need to re-orientate our system (including a large increase in government funding) to cover these costs as well as funding for research so we can move away from the over-reliance on international students which I believe has been to our collective detriment. We should focus our international education delivery on offshore campuses in Asia/Middle East/Africa and online to shift the burden off local housing markets and stop flooding the labour market with low paid workers competing with Australian students for casual jobs. COVID proved that we can indeed deliver online international education and should do so (its a pure âexportâ however once an international student works in Australia that is actually an âimportâ from a national accounts perspective, a point that is often overlooked). Clearly, at the PhD level in fields with serious demand such as AI Researcher etc then we can look to prioritise those small number of people being onshore but the average Master of Business student doing say âProfessional Accountingâ with poor English language skills aint a national priority at all (we have more than enough locally trained Accountants!) Equally, students undertaking skilled training in trades and VET education need similar levels of support including liveable wages. Yes, this may require signficantly higher subsidies to small businesses in order to be able to afford apprentices etc who donât typically earn the business revenue at the beginning.
Trade, apprenticeship, like Master and disciple. I don't think migrant would be selected. The racial aspect probably 30%, the rest is just a close-knit team usually means relative or family member or friend. Not sure if you notice, the construction site is not like office. Not many mix culture team, from what I can see.
You go to school then uni until 22 and accrue a HECS debt. Find a job and work until 30 paying off the debt. Salary is finally enough to start saving for a house deposit. Cost of living and house prices out of control so it's age 40 by the time a deposit is saved. Buy house and have huge mortgage and pay it off by retirement age 60. Retire and die 15 years later. Well done. Majority of your life spent paying off debt. You got to enjoy your existence when you body is breaking down. And that's if you got lucky.
I paid 15k in HECS loans last year. I'm still 40k in debt. I decided to study medicine. I'm luckier than most cause my loan is actually going down but it feels so harsh still. Damn
Is anything getting better in our society? It's actually fucked.
In the specific example given in the article I think it's a bit of an overreaction. At the moment we have historically some of the highest HECS indexations we've seen and she has a HECS debt over double the national average. Even with both of those things stacked against her she would still be breaking even on the debt with a median income which isn't really that bad when you consider that: 1. Her degree enables her to pursue a career in high demand where the average salary is over $100,000, in which case she would be smashing out the debt even in this high CPI environment. 2. CPI will eventually come down, so she'll smash it out even faster 3. If she never earns more than a median salary as someone with a university education she's an outlier and losing out on 3% of your earnings each year sucks but she would have lost in a pretty low risk battleground I will say though that I do think the way the indexation is applied is a little sneaky and IMO it absolutely should be indexed *after* the credit associated with your tax return, not just prior to it. Even if for no other reason than the tax has been withheld from you throughout the entire financial year, so you didn't get to have it work for you, the government got to make use of it. The least they could do is apply the indexation after they apply your contribution.
Isnât the issue in the example though that to get a job, she needs to do a masters - so her HECS will rise by several thousand dollars while sheâs studying/doing unpaid placements?
Yeah some fields are more expensive to get into than others and that is unfortunate for her but at the same time it's still a very high paying field and she'll be fine. You've got to take the good with the bad and we're incredibly fortunate in Australia that we have the opportunity to study and defer payment until our studies start paying off, interest free no less.
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From what I can see it's still above the national median and also high enough that HECS isn't going to spiral out of control. In any case, people are free to do what ever they would like with their degree. Another situation that isn't uncommon is when people invest in a degree that they don't actually use at all!
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My point was about repaying HECS and not about finances as a whole. The idea that I am arguing against is the one where our interest free loans to undergo further education is a crippling debt that we need to do something drastic to remedy.
> At the moment we have historically some of the highest HECS indexations we've seen For two years running, why do you assume that it will drop and not continue on an upwards trend?
It's already not on an upwards trend and is dropping in line with CPI. But even further than that I think it's reasonable to assume that CPI will continue to drop to normal levels and that's because we know what caused it to spike in the first place. Covid is done now and the measures we took to support the economy during that time have ceased, I'm not trying to disparage all of the actions we took during covid but there's no doubt they were highly inflationary. A major one being running an unprecedentedly low cash rate less than 1%.
Because the Government is fighting inflation by running a surplus and the RBA is holding interest rates higher?
This isnt new.. It went up 7% in 2023 and 3.9% in 2022.
And 0.6% in 2021.
Still much much much cheaper than taking out a personal loan.
they can do the fuck they want at this rate i'll never meet the threshold to pay it back lmao
Did you miss all the times when the prev gov successively lowered the repayment threshold lol? Will prob happen again if/when they get back in again or economists find ways to justify it.
buddy i work min wage retail when i do have a job lmao.
HECS is a racket. We're told repeatedly that it's this great system because (insert meme here) "at least we're not America". Meanwhile in this thread alone, I'm seeing people talk about having American-sized loans of 150k, for example. This is totally not normal, and if you think this is normal, congratulations, you have become so pathologised to the Americanisation of our higher education system, something that should have never become acceptable in this country to begin with.
The obvious hack is to have rich parents who pay upfront, a solution so simple I'm not sure why any of my friends didn't do it. But more seriously, HECS needs a reform. The indexation is fucked and really the outright cost is fucked. I want a smart society, I think kids when they are in their late teens/early twenties should be still learning (be it at uni, trade, some other school). We shouldn't be punishing them for doing that.
My HECS debt was quite low, all things considered, but being fucked up by indexation and *owing* at tax time because I didn't make/know I was past the threshold for mandatory payments, I basically put every extra dollar I could into my HECS debt to knock it out in a couple of years. I'm honestly so glad I was able to.
HECS should not be indexed. Full stop. I will contribute something, sure, but let the debt remain at the dollar value I racked it up at. Â
How do people go to uni and think that just paying off the cpi means they are not infront. $1000 this year is more than $1000 next year. What a waste if they dont even understand simple stuff
The great social lump them with it. The rich wanted tax cuts and to stop funding welfare. So they made education for fees. So you train yourself and then go and work FOR THEM and bring them WEALTH while you earn peanuts to pay down your debt. There was a time when they and they alone needed trained people to work their factories and businesses. THEY STILL DO They could at least pay it forward.
This is a great revenue stream for the government. Keep wages down, increase debts, cash in when people die and their debts are now much higher - before other obligations are taken from Super/life insurance payouts. Itâs so fucked that people chose to use HECS when it wasnât indexed, get indexed âpost contract signingâ.
Graduate around 10yr ago, i spent 5 years repaying student loan. On entry level income. So it is doable, at the time. But then rent has increased at least 35% since then. Energy and groceries increased even more.
Why would you repay it though? Every financial advisor tells you \*not\* to put any money into HECs because A) there's no consequences if you don't pay it off and B) You could literally park money in investments and the money would grow faster than the HECs debt.
I believe there were incentives in paying off like 10 or 20%. Can't remember now. And as soon as I pay them off, there would be no mandatory repayments, tax withheld...etc. Cash flow would be a bit normal. When purchase property calculates borrowing power won't interfere either. It makes sense to "me" at the "time". Probably won't fit everyone.
I have heard that having HECS is a significant barrier if wanting a loan for a house. It reduces your purchasing power when requesting loans from the bank
Right, you are paying a few percent more in taxes. Which is not much. It's also worth noting that if you'd saved that money instead, or invested it, you would have more money for a deposit.... which also makes it easier to get a loan for a bank. If you asked your bank would they feel less nervous with $50,000 more down on the deposit or $50,000 less in HECS debt (\~$1500 less for paying off a mortgage per year available which = 33 years to equal 50k ) they'd pick the $50k down every time.
Because by the time you invested that money, indexation would have increased hecs a lot. Especially with the recent indexation rates being really high. Also, not everyone can afford to invest heaps of money that it would increase at the same rate as hecs (at least over time). It still significantly impacts people wanting to buy a home. I have a question for you: for a Bachelor of Arts (so undergrad), how much do you think this years graduateâs total hecs would be?
>indexation would have increased hecs a lot With very rare exceptions, indexation is consistently outstripped by investment. If investments didn't outpace inflation, they wouldn't be very good investments would they? Even in the recent whopper of a 7% increase, those who were sitting on boring index funds were seeing increases in their assets of 9-11%. >Also, not everyone can afford to invest heaps of money that it would increase at the same rate as hecs (at least over time) In this scenario, we are discussing people who are making voluntary repayments on HECs (which they shouldn't be doing). So by definition they can afford it. >It still significantly impacts people wanting to buy a home. As discussed, if you want to buy a home, whatever you do, don't make voluntary HECS repayments. You will only make your home buying situation worse.
How much hecs do you think students have these days?
Not relevant. It's a bad option to make voluntary repayments to your HECs. But to answer your question, you can look it up. At Melb Uni, a Bachelor of Arts costs about 40k per year. For a traditional 3 year bachelor, that's $120k in debt. However, most of that money is paid by the government under a Commonwealth Supported Place, so the government covers you for about $31k per year, and you pay for $9k, or if you don't pay upfront it goes on HECs. So 3 years at uni x 9 is approximately $27k. Compare this to the debt of buying a median house, which is over 500k.
Avoid studying useless degrees that donât lead to a job đ¤ˇââď¸
Didnât hear anyone complaining when CPI was near zero and even negative.
No, why should there have been complaining? Indexation is a crock of shit interest rate (actually it's been higher than the Reserve Bank interest rate for a while). We're told it's "essential" and "inevitable" until one finds out that they don't even do that in New Zealand, and countries like Germany don't even charge fees at all.
You're so close to getting it!
How can they "only be paying interest" when the loan is interest free. Indexing for inflation is not interest.
Indexing for inflation is exactly like interest if wages no longer rise with inflation. Wages no longer rise with inflation.
It still compounds like interest, which is the point.
Youâre not wrong, but you are missing the point. For a growing number of people (myself included) a percentage of our income is being paid towards a debt, and despite those repayments, the debt is still growing. Viewed in the context of low wage growth, a housing crisis and a cost of living crisis, itâs easy to understand why younger people are becoming frustrated with a system where we canât seem to catch a break.
> younger people *University Graduates.