Kristy Iervasi describes her student debt as a problem that’s always in the back of her mind. At 31, the Sydney small business owner and public health promotion graduate owes about $28,500 under the Higher Education Loans Program. She acknowledges it could be higher but says she’s too scared to look.
HECS debt, also known as HECS-HELP, has long been called the best debt one can have – the government loans don’t technically charge interest , there’s no deadline to pay it off, and the size of the mandatory repayments increase only in line with the graduate’s salary.Indexation is applied to students’ debt on June 1 every year, and will hit 3.9 per cent this year. That’s up from 0.6 per cent in 2021 and 1.8 per cent in both 2019 and 2020.
Around half of her clients decide to pay off the debt and use the extra savings to build up a larger deposit. Their general rule of thumb? If a graduate is on track to pay off the debt this year, they should pay it off before the indexation is applied in the one-off sum in June. Otherwise, leave that debt be.
Broome says she spends a lot of time speaking to parents of children who are either approaching university or who have a HECS debt, with many wanting to know the best way to help their kids. Noting that repayments begin at $47,014, and are paid at 1 per cent at that income, he doesn’t see the need to alter the system in “any sort of enormous way”.
Provided it’s not for an arts degree, yes