With today's inflation figures being released we now know the indexation rate for HECS debt will be ~3.9%
Keen to hear if people will be paying off their HECS before indexation hits?
HECS Indexation to be 3.9% for FY22 - Will you be paying off your HECS early?
currentfad on 27/04/2022 - 21:53
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Free education was a massive perk.
But complaining that people in their 60s are "top of the range at their current job" is hardly valid. I'd expect that nearly everyone still working after 40 years will be at the top of the range regardless of what generation they were born to.
The other boomer bullshit is all the previously government owned assets they sold off that we now pay private companies for. Telstra, Commonwealth Bank, Electricity suppliers, CSL, CHEP (Brambles) and so on.
Boomers are not responsible for these. It was the rich class looting the government services.
A similar comparison is the governments today selling off assets. Are millennials to blame then?
Pitting the classes against each other while the rich class gets away with looting is a classic divide and conquer strategy by the billionaires. Tax the rich.
The majority of lawmakers and high ranking officials are boomers. They're responsible for introducing bills and passing them to line their pockets.
Boomers are responsible for everything that is wrong with Australia.
@rektrading: It is now the year 2050, boomers have died off and a post on Ozb says this:
The majority of lawmakers and high ranking officials are millennials. They're responsible for introducing bills and passing them to line their pockets.
Millennials are responsible for everything that is wrong with Australia.
Funny that. Tax the rich.
The majority of lawmakers and high ranking officials are boomers. They're responsible for introducing bills and passing them to line their pockets.Boomers are responsible for everything that is wrong with Australia.
by that logic they are responsible for everything good about Australia too?
im a millennial and i dare say pushing for 4 weeks annual leave, long service leave and sick leave were all done by boomers fighting with there union against 'the rich'
i can think of at least a dozen other things 'boomers' have done to improve our lives that i know i take forgranted.
If anything millennial and younger people seem to lack basic understand of how the world works. - i see idiots like Harry and Megan pushing for climate action whilst they take their private jet home to a house that has no solar but 15 air cons and a 5 liter Royals that drives them around…..
I actually question the current younger generation and they are being modeled into idiots it is ok to want to be a girl if you are a boy because 'feelings', you dont need to try hard to get a ribbon, you should take a high interest loan out to go on holidays YOLO, it is everyone else fault YOU cant buy a house even though you studied a useless arts degree that had no job prospects and refuse to get of your arse and retrain, want a new hand bag you dont need just use Zip or after pay for that….etc
by that logic they are responsible for everything good about Australia too?
Are they doing anything good?
@rektrading: I'd argue Australia is one of the best nations in the world to live….i wonder if we will be saying the same in 30 years when our generation are in-charge….
@Trying2SaveABuck: Why are so many ozb so 😡 at the gov if it's the 👍 nation in the 🌎?
All I see is vote them out blah blah blah.
@rektrading: once again your logic is pretty short sighted - same people voted this government in it is call democracy but the problems we have aren't just this governments fault.
@Trying2SaveABuck: If one digs a little, they'd argue otherwise that, this is one of the "best" nations.
If one digs a little, they'd argue otherwise that, this is one of the "best" nations.
those ones are welcome to go 'live' somewhere better? in which i would argue there are very few options that a better then Australia
Spot on. The same people asking for HECS to be paid back also benefited from $0 tertiary education at USyd. Hypocrites much?
Inflation at highest level since GST
By Rachel Clun
Consumer prices jumped by 2.1 per cent through the first three months to March, taking annual inflation to 5.1 per cent – its highest level since the introduction of the GST.😆
Wow, paid mine off just before Christmas, good to know this was a good call. Sheesh
Congrats!
Make 50k. Only pay 1 percent
If you pay it off what happens to deducted hecs payments from salary?
It's not "cordoned off" separately for HECS purposes so it will be refunded.
If you paid the right amount of PAYG it'll all get refunded, otherwise contributes to any deficit from your PAYG tax, or added to any PAYG refund
Your employer will also continue to take HECS deductions until you tell them not to (with a new TFN declaration) so I'd recommend getting that in before your first pay in FY23 too
HECS lifted by inflation but yet the Government is responsible for the money printer going Brrrrrrrr.
This is the Government robbing the middle class with both hands and eyes wide open.
This is the Government robbing the middle class with both hands and eyes wide open.
What's new.
Devaluing people's savings is a game played by all gov around the world 🌎.
Billionaire media letting billionaires get away with it.
When’s the indexation date? 1st June I think? I’ve only got $1500 left, so planning to pay it on payday in May.
Yep. And good idea
1st of June is right. Problem is the money withheld by your employer from the past 11 months isn’t counted when indexation applies. If you have $10K debt now, $8.5K paid by employer and $1.5K remaining, they’ll apply indexation on the $10K. Best thing to do in this case is pay $10K and get the $8.5K the employer put aside returned to you as a refund when you do your return.
From July 1st last year I got my employer to stop paying towards hecs debt. So nothings been put in for it this FY.
I’ve had the $1.5k outstanding all year and payed it off last week via bpay.
Nice. I wish I did that. How did you do it? Do you just submit them the form saying HECS is already paid off?
Does anyone know if it’s indexed before or after they apply what you’ve paid over the past financial year?
I think it has to be after :(
The money you've paid over the last year is credited when you do your tax return so has to be after June 30 and therefore after the June 1st index date. I'm considering overpaying before June 1st to avoid indexation and then claiming back a few months later when I do my tax.
Whatever you paid in the year ended 30 June 2021 will be taken into account, because all those "payments" you make during the year actually don't hit your balance until you do your tax return.
Anything you've been 'paying' since 1 July 2021 would not be counted towards your balance
Sorry to be clear, are you saying that my current balance, despite having PAYG withholding from my pay for HECS over the past year essentially won’t count in terms of indexation? They will apply indexation to the current balance and then deduct that withheld amount from the indexed value? If so, that seems like a bit of a rort.
It appears to be how it works. You can check your ledger on the ATO website and see exactly when and how much each DR/CR was including the indexing DRs. Agree it's unjust. I payed off close to 10k over the last FY, so im going to get charged a sweet $400 indexation on debt already paid. Thanks ATO
Yes, it is better to tell your job you have no hecs debt, save the money yourself then pay it before the indexing date. You get the benefit of keeping the cash longer also.
The whole education system is a rort.
The years lost on some dog shyt degree is a rort.
The associated HECS debts are a rort.
The taxation of said debt is a rort.
The indexation is also a rort.
PAYG is a rort.
Everything the gov't touches is a (profanity) rort!
It’s indexed before they apply your payment. At least that’s what my hecs payment history on the ato website looks like
Yes, but only because I have 1 year left and money in an offset account. From the offset I save 2% on my loan but by avoiding HECS indexation I'll save 3.9%.
Recommend paying off as ASAP if you're on a decent salary. If not paid off, a $30k debt could rapidly swell to $40k. Then it will continue to inflate as you pay it off. Mine was a good $170 chunk out of my paycheck for many years.
If wages are rising at or above the rate of inflation, then the debt rising from $30k to $40k isn't really a problem. Inflation is significantly outpacing wages growth right at the minute, but that's not typically the case.
I suppose it just depends how much it annoys you to have a decent chunk of your income removed each fortnight/month. If not annoying to you and you're doing fine financially, then no problem.
Wages have been stagnant for years (decades?)
"Inflation" is controlled against the middle class.
If people think a $75k 9-5 job until 65 is safe, think again.
Why are people so worried about the rate hike?
Student debt isn't meant to be paid off. The way to play this game is to keep the income below the threshold and earn 💵 using other sources without triggering a collection notice.
If you only have 1 year to go and have the money lying around it makes sense. No point in paying 4% more, having it taken out of wages and only credited to you in late 2023 when you can avoid the 4% right now.
Depends on if you're able to take the money you would use to pay HECs and make more than a profit of 3.9%/ann.
I had daddy pay :), had a choice of either private school or getting my uni paid for me. Took the latter.
Bbut seriously if i still had a hecs i'd be paying it off as fast as possible (even if it is only indexed at CPI)
The only good debt imho is a mortgage.
If you pay It off as fast as possible you might not have any money to get a mortgage in the first place…
Hmm typically HECS indexation is so low that it’s not worth paying off in lieu of doing something else with that cash. For example, investing that money instead would yield you a better outcome than paying it off early under most scenarios just to avoid the indexation increase. Banks also don’t really care about HECS debt when applying for a mortgage, like they would credit card debt or a loan.
At the end of the day it’s debt, but it’s the best debt you can have and very safe debt, and if you can’t afford to pay it, it just sits there. Debt collectors aren’t going to chase you down lol.
Having said that, I’m tempted to pay mine off just to see my fortnightly wage increase by heaps…although it’s still probably a bit too high for me to want to lump sum pay it off at this stage unfortunately.
If you can find me a place that guarantees a return in excess of 3.9% in this market sign me up. Noting you'll pay tax on the returns which would require closer to a 5% p.a return.
We're headed for stagflation/a recession and no amount of steering will stop it
This is the first year in a long time that it's even a potentially good idea to make a lump sum payment on the HECS debt. Normally I'd agree that it's the best type of debt to have (zero real interest rate, and repayments magically pause if you fall on hard times), but as Drakesy said above, there's not exactly an abundance of better options than an almost instant and risk-free 3.9%.
@Drakesy: You're not paying attention.
The rate is stable at +19.47% APY.
https://files.ozbargain.com.au/upload/393946/91009/screensho…
@rektrading: I know the basics/concepts of staking but can you provide more info on exactly what you're doing? What is the risk you lose you're original investment?
upvoted as this is sound advice and nearly spot-on and is exactly what I'm thinking about myself. What I say below is in no way trying to discredit you as I agree with the sentiment and points raised above and like yourself my current savings balance isn't quite enough to lump sum pay it off, just wanted to point this out for people who might be otherwise unaware
Banks also don’t really care about HECS debt when applying for a mortgage, like they would credit card debt or a loan.
The one point that I would like to clarify on is that banks (I work at one and recently got a mortgage from another) do care somewhat about your HECS debt as it affects your net cashflow (income after tax/other deductions) and thus reduces your loan serviceability (i.e. ability to make repayments). You're correct that unlike CC's they don't really look unfavourably on HECS debt and don't really push you to close it before applying for a loan (or otherwise give you a massively lower borrowing capacity), but nonetheless when going in for a mortgage it will be a constraint on your maximum borrowing capacity (if you do not need to utilise your maximum borrowing capacity then you'd usually be better off leaving it open).
Personally for me, I didn't close my HECS debt when getting my HL as paying off 32k in debt (which at the time had super-low interest and would otherwise erode the savings that I put aside for renovations) to get an extra 50k of borrowing capacity wasn't worthwhile (i.e. net 18k higher borrowing capacity). However now with the renovations now nearing completion and the market just past its peak, I might consider going for a re-fi and using some of that extra $$$ (IR < 3.9%) to pay off the HECS-debt and allow me to bring forward any future borrowing as my income will no longer be further constrained by HECS repayments (with the residual $ from the re-fi staying in offset and thus not costing anything).
Is a HECS-HELP debt indexed before a voluntary payment is made? I.e. If I pay off my HECS-HELP debt this month ($13k remaining) via voluntary payment, will I then avoid indexation on that $13k when I submit my tax return?
EDIT: Found the answer on the ATO's website. You can AVOID indexation if you make a voluntary repayment before June 1.
- "You may also benefit if you make a voluntary repayment before indexation is applied on 1 June. If you intend to make a voluntary repayment before indexation is applied, it is important to allow enough time for the payment to be received and processed by us before 1 June." *
Source: https://www.ato.gov.au/Individuals/Study-and-training-suppor…
Avoid indexation if ATO receives your payment before 1st June.
So you need to make payment a few days before.
dat feel when you thought you would be smart and invest everything other than daily spend balances and be earning min 7% average over 12 months but currently sitting at -20%
/# REKT
Well I did say min*** - but it’s all irrelevant as it looks like it will just be a HODL situation for foreseeable future.
There is no need to hodl this kind of 💩 🪙.
They have the same face value as the USD.
+19.46% APY on USD is better than anything the legacy 🏦 can offer.
Thanks OP for the reminder…I've been letting it hum along as indexation has been so low for so many years. With only ~$1k remaining I just paid it off - I know I would have paid a bit on PAYG from last year but not sure the exact amount so may as well just get rid of it all now and get that amount back on my tax return.
Has it always been indexed since the start?
You could always sit tight and hope the Greens get elected - one of their policies is to wipe student debt instead of implementing stage 3 tax cuts. Then you could use the money to buy a magical rainbow unicorn. (both things are equally likely!).
"The Greens plan to wipe all student debt would cost $33 billion over the forward estimates and $60.7 billion over the decade, about a third of the $184 billion cost of the Stage 3 tax cuts.
Analysis prepared by the Parliamentary Budget Office finds that in 2024-25, the benefit of the Government’s proposed Stage 3 Tax Cuts will overwhelmingly flow to higher income earners and men, while the benefit of the Greens’ plan to wipe student debt will flow to low and middle income earners and women."
(lifted from their media release)I would not pay it off (any more than is required when you lodge your tax return, for example) under any circumstances. Who can get a personal loan at 4% these days?! Count yourself lucky that you’re not an undergraduate student from the USA
I second this.
The only instance where you come out on top is if you need to take out a home loan (hecs debt significantly impacts borrowing capacity).
Thanks OP. I have 25k remaining so around ~1k increase for me. Wondering if I should pay it off at this point.
(profanity) perfect. This is the first year I've earned enough to have to pay any of my HECS back. The amount that the indexation is going to increase it by is going to be within a few dollars of the amount I'll pay.
What pisses me off is that when I took the loan, there was no indexation and the repayments started at a much higher income. Why is it that they're allowed to change the terms and conditions years after we've accepted the contract, but we can't?
Merged from Are you paying off your fee-help debt before tax this year?
Indexation is due on the 1st June, and as I understand it, whatever balance you have on this date will have the indexation applied. Your balance won't reduce by employer contributions until your tax return is lodged after 30-Jun-22, and indexation is expected (not officially announced) to be 3.90%.
Personally i have approx $65k owing today, and would be paid off in 4yrs, I've worked out that i would save roughly $4k over the next 4yrs if paying off vs retaining the cash in my offset (with some reasonable assumptions applied). Obviously if I invested the $65k elsewhere i might see a better return vs offset/Fee-Help, but i've got more than enough cash in my offset to do both, and to date i haven't made alternate smart investments, so I'm planning on paying her down.
Interested to hear what others are planning to do, if anything!
Poll Result
- Yes, will pay all down before 1-Jun (10 votes)
- Yes, will pay some down before 1-Jun (2 votes)
- No, will leave as is paying off minimums (27 votes)
i've got more than enough cash in my offset to do both,
Nice flex.
If you got the cash to splash -why not
ha, sorry :(
I've seen on other forum posts people saying "cash you can access is better" or "invest through other more profitable means"… no easy humble way of saying they don't necessarily apply to me
Are you paying off your fee-help debt before tax this year?
People should only pay if they've a high income and no way to reduce their tax liability.
curious to why you think that's the 'only' reason they should pay. In fact if you reduce your tax liability, it would take you longer to pay down the debt as you reducing the contributions… that could result in higher total indexation costs over a longer term…
I've learned that J.O.B robs people of their time while buy, borrow, die gives people more time to enjoy the 🌇.
coz rektrading can earn 50% everyday
@Donaldhump: I'm 😭 down by -50% because the 🌕 moved in the wrong direction.
The 👍 news is that I can still afford to chow down on a juicy 🐄.
I'm similar position as you. I'm hoping to break into the property market though if the prices go down, so would rather use the extra cash as part of deposit (reduce LMI) then HECS.
yeah makes sense. Jut watch that the fee-help balance doesnt impact what you can borrow!
It will inevitably affect how much you can borrow.
Its not the balance that impacts borrowing, its the compulsory repayments. There's X% salary each month going to HECS which reduces your take home.
Obviously if I invested the $65k elsewhere i might see a better return vs offset/Fee-Help
Put it into property. 20% drop. DCA. LOL.
All markets are in a spasm due to rate rises. The Fed rate is now 1%, market expected 3%. Share market 12% down. Implied another 24% drop LOL. But you can always say 12% down is markets adjusting to 3% but don't forget markets overshoot up and down so maybe another 10% drop in share market.
Paid off last week. Only had 7K and was doing minimum repayment, expecting I'd pay down to zero by next year, but I'd rather pay now and skip this years re-indexation.
Mine will go down to $0 just with my standard contribution (it's a 4k balance now). however to avoid paying the indexation im just going to pay it off with cash before indexation is applied then get the contribution back when I get my tax return. The cash is just sitting in my offset at the moment for my quick access emergency fund so it will only dip down temporarily.
I'm in a similar situation. My balance showing from July was about 3.5k which I would have paid off by now. I haven't asked my employer yet to stop paying HECS as I figure will be extra come tax time. My cash is in my offset too, seems I am perhaps better to pay my HECS off now?
Can i ask what you mean by getting the contribution back when you get your tax return? Do you mean you can claim it somehow on your tax return to reduce your taxable income?
If you have overpaid HECS then you get that amount back at tax time…. Is my understanding anyway
Can we all confirm that uni costs / indebtedness / indexations are a scam, let alone the BS you "learn" in that "degree"?
People don't seem to know how much of a rorted system our education is…trying to figure out which use of scare quotes is the more down-the-rabbit-hole-we-go
(C'mon man, you think that's "learning"??) versus (C'mon man, you think that's a "degree"??)
Porque no los dos? 🙌🎉
It comes from the brainwashing when the child hits year 10.
Maybe for boomers it was good (also because it was free) - You were either labourer or professional back then.@Brodo Faggins: I'm putting my money on the "degree" one, actually.
Even if you 'they just write down what the professor tells them and repeat it riiiight back at him in the exam without ever actually thinking about it man', to discount the 'learning', they still get the piece of paper at the end that's an actual degree.
Like, how do you throw shade like "ha ha, universities just THINK they're offering degrees, they aren't really degrees, degrees are something else"?
@CrowReally: You're both right.
Piece of paper just means you can regurgitate memorised information - but not necessarily be able to internalise it and apply it practically.
Degree is pointless unless you need it (like lawyer/health professional).
Even accounting you can learn more online through courses and youtube.@Brodo Faggins: I agree with your argument, I guess a suitably motivated person could learn from all sorts of sources, and then could build up an (unknown) amount of internal knowledge.
But then I suppose there would be risk of people learning from bad sources (there isn't an editor that prevents randoms making bad and incorrect YouTube videos) or possibly not having the right level of knowledge. I mean, you'd need to verify they knew this stuff before you hired them for the job at the end, right? You don't want to hire an accountant who has the wrong idea of what equity accounts are, or never learned them in the first place.
So, uh, I guess we would need some sort of standardised knowledge base (things you have to read, tests you need to pass to prove you learned them) and then some certification to confirm they'd done so (piece of paper saying they'd done the things).
Hmm.
@CrowReally: Youtube is just one example - there's risk there, but there's also decent people teaching gold too.
You can also find courses from Udemy, or teaching platforms from the online galore, or get a private tutor and cut all the useless filler units of the degree in between.
For Accounting you'd still need to complete a 2yr post-degree examination to be fully accredited - the CA or CPA.
The 3yr Acct degree bit prior to that should be optional.@Brodo Faggins: I'm not sure I'm following the point here. So, anyone can call themselves an accountant because Uni study is no longer required .. .. but then they need to apply to a smaller non-Uni institution and do a smaller course (CA/CPA) for a piece of paper anyway? Are we actually cutting out steps here?
This actually exists right now - the easier CPA program doesn't require a degree to enter the program (you just need to pass an exam showing you know the foundations) and the much more difficult CA program requires a degree to enter the program (but it's more difficult and has a higher standard of assumed knowledge).
@CrowReally: You're correct - There's programs where the 3yr Accounting Bachelor's degree is not required.
You can even get certified in Tafe.
Or learn online and head straight to do the Programs.Also without an Acct degree, one can still be a bookkeeper, accounts receivable/payable, acct admin, tax prep, auditing admin etc.
Then gain the exp. do a CA then be fully qualified (without a degree).@Brodo Faggins: Well, we've acknowledged there's multiple paths to arrive at the final outcome. I feel like that's not an argument for one of the paths (University) not needing to exist, though.
It has value for the people who don't want to take the long way there (do other jobs first, build up industry experience, transfer across). I think the system works better leaving it as it is?
At my current rate, as a lawyer, I don't think I'll ever pay off my HELP debt if I keep paying the monthly minimum. Uni truly is for suckers (unless you went into med, IT or actuarial science, then you probably will actually achieve greater lifetime earnings than a tradesperson).
I have about 20K left to go. As far as I can tell my employer has taken around 10K out of my pay so far this financial year. If I pay the 20K tomorrow am I right that I should be able to get that 10K back after doing my tax? (Assuming my PAYG was taken out exactly right and I don’t owe any other tax?)
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Of course it is. Will I ever fu$%king pay this off?
Burns me to think some boomers were given a free education, top of the range at their current job and still complain.