Hey all,
With the index moving up to 3.9% should I pay my HECS debt off and be done with it.
I have the required cash sitting in a savings account and that won't need to be touched for 10years+
On the other hand I'm a stay at home dad and its going to be a very long time until I earn over $46k and potentially may never again. So maybe I just take the debt to the grave??
Thanks
They say if you owe money and don't pay back, you will go to hell after you die and not eligible for reincarnation. They say…..! unkown, dont know.
They say if you owe money and don't pay back, you will go to hell after you die and not eligible for reincarnation.
This only applies to people who religious.
Hmmm who's they? When you're reincarnated has the debt been wiped?
Also just a side note. When people say NZ is more left leaning that AU… I dare you to mention deliberately not paying off your Student Loan in an NZ forum lol. Sit back and watch the neolib rage fill them and coarse through their fingertips like sith lightning.
Yeah you definitely don't know how to use the phrase "neoliberal" properly
Just leave it there, and if you earn more than 46k, they'll withhold a little more tax. Not a big deal.
Never pay it back just for all the boomer tears on ozbargain crying about it
Some facts. Underlying a lot of the views here is an assumption that a student's HECS/HELP debt equals the full cost of their higher education place. Except for a few full-fee places, that is not correct - the taxpayer separately funds a large part of the cost of a Commonwealth Supported Place and that subsidy is never retrieved through HECS/HELP. And there is a separate means tested subsidy for income support while studying that is not paid back.
You know you are unlikely to repay your HECS/HELP debt when you look around the classroom and realise there is only one viable job relevant to the study - teaching the next generation the same useless subjects.
HECS debt impacts your lending capacity, so keep that in mind if you're going to take out any loans in the future.
Personally I'm grateful for HECS, it's not for all but it allowed me to pay for my education. Look over to the US and see how they have to mortgage homes to pay for higher education, we're really lucky here.
As someone who paid it off last year once it naturally drifted down to around 5k. It was super nice to be rid of it, and the take home pay increase each fortnite was nice. Not the most financial savvy choice ever - but tidied up another account that never needs to be looked at or noticed again.
saving 3.9% is still a saving! the free cashflow is also sweet. Like a mini payrise!
I paid mine off it's not a high balance (studying part time and working full time). Rate is much greater than my home loan rate, and also frees up CF since I've asked payroll to not withhold tax, and tax refund this year will be sweet due to the withholding.
Having a big tax refund is a bad thing! Giving the government a 0% interest loan for a year isn't good!
No one knew the inflation rate 12 months ago! If it was low, I wouldn't have paid it back
Hi, have we meet?
https://www.ozbargain.com.au/comment/10591370/redir
rektrading on 14/06/2021 - 09:24
The retailers are pricing in the next inflation increase.Fiat is losing its value more and more every day. Don't be the last one to do something about it
thanks for all the advice. I was pretty close to just paying it off but have now decided to just leave it.
There seem to be some salty people in the comments but I got a good laugh out of it.
You do you. Good decision.
I guess if you want to live on a wage of 42k or under for the rest of your life then good luck 🤞
There are more ways to skin a 🐈.
Borrowers can keep their taxable income below the threshold and operate LLC/PTY to limit their liability.
@rektrading: I guess kudos to OP if they are able to do that. And if he can survive on <42k and pay rent and give his family the best quality of life he can with his capabilities then good for him.
Btw dies anyone think it's interesting that min FT wage in aus is about $40k but the threshold for paying back Hecs etc is just $47k. Considering it's supposed to be for the purpose of well paid employment, I feel like gov know something that we don't know, in the fact that the threshold to repay is only 10 higher than minimum wage. Less if you remove the taxed component of that extra $8k.
The $47k threshold is for the minimum 1% repayment rate. At $54k it goes to 2% and so on.
When HECS was introduced, the repayment thresholds were originally much higher, relative to minimum wage, and the government of the day argued that they would not burden low to middle income earners. The legislation has been changed a few times over the years. The most recent change to legislation was in 2018, which lowered the thresholds. The thresholds are now indexed with inflation, but the minimum wage is not indexed.
There's a timeline of changes to HECS on the parliamentary website
Paying it off benefits the country. Taking it to the grave benefits yourself.
I know which one I want you to do for me, and I know which one I would do if I was you.
Paying it off benefits the country. Taking it to the grave benefits yourself.
The feds making education free would benefit both Australia and everyone that wants to use it.
Paying it off benefits the country
Imagine saying something so wrong so confidently
You're gonna have to explain that to me. He took a loan from the govt (hecs), so paying it back returns the money to the govt, does it not?
Also, making education free for everyone will mean that my taxes are subsiding other people's education at the same time im paying off my own hecs debt with more of my money. Surely you understand why that sound unappealing to me and others like me?
The government is a currency issuer, providing debt in their own currency is not the same as you or I issuing a debt.
The economy benefits from keeping debt and money circulating in the economy. So for lower income earners who traditionally dump most of their income back into the economy, there is much more growth to be had just by letting them spend it. Bigger economy = better for everyone else.
@Scantu: The govt can redistribute it with the same effects. The difference is the govt is in control of where that extra money goes in the economy vs some guy who may or may not choose to spend it.
@StalkingIbis: Low-income earners are more like to spend a higher portion (%) of their income on goods than higher-income that spend their income on hard assets.
💵 flows up from the poor to the rich.
@rektrading: I hear that a lot, but I dont know that I fully believe it.
As a poor person myself, I go and spend money at coles, big w, netflix, internode (ISP), and my bucks stop there. Coles doesnt go and buy from the coffee shop on the corner who hires the trady who goes and sees a movie at a family owned cinema etc.
I dont know that I am really stimulating the economy all that much by spending my money.
If instead, I had more money, and went and bought the premium brands at coles, and got clothes from somewhere a bit fancier than BigW, my bucks still stop there at the retailers.
The amount of jobs required to service my purchasing is the same. It just so happens that I paid more for the same amount of stuff.
Or maybe if I got a bit more money I could put a bit more away onto my mortgage, or save it for a rainy day…Once again, not stimulating the economy.
Thoughts?
@StalkingIbis: You (everyone) is doing a huge job to help/stimulate the economy by buying the essentials milk/bread/cheese/potatoes whatever at Coles. Farmers, packaging, transport/logistics, retail, cleaning, chemicals, trades and all the support staff/admin etc that goes along with the headline roles are supported by you. Then there is GST (on many of the supermarket items) the income tax paid by the workers, the corporate taxes paid by Coles. Then whatever is left over goes to shareholders as dividends. Lots of these dividends it pays go to self funded retirees who then don't drag the public purse by drawing as much (or any) pension. Per comment from rektrading, I really think it is the lower income earners who actually power the economy by plowing a larger percentage of whatever they earn/come across straight back into the economy. The worst thing that can happen when trying to stimulate the economy is richer folks plowing the money into their savings or mortgage or heading off overseas on a trip. Sadly the opposite is now the case where the government is trying to slam the brakes on to curb inflation - the best way to do this is punish the lower income earners by pulling whatever money they have out of the system by supporting either directly or indirectly higher mortgage/rent/power bills/petrol thus reducing demand for everything else.
I hear that a lot, but I dont know that I fully believe it.
Thing is though it doesn't matter if you believe it or not - it's factually our economic model
The govt can redistribute it with the same effects. The difference is the govt is in control of where that extra money goes in the economy vs some guy who may or may not choose to spend it.
The government is a Currency issuer. It does not need your money back.
Unpopular opinion: if you have a debt to the gov you should have to pay it back (tier based percentage) no matter what your income is - even if you’re on centrelink.
You took the loan and got a degree didn’t you?
The rules say that borrowers don't have to pay until their income is above the threshold.
People that don't like the rules can change them.
People here have a really simplistic idea of how debt works.
The government would rather you stimulate the economy than pay it back. That's literally why the rules exist.
Totally agree with you, however an income threshold to payback the student debt exists so as to not drain the individual’s already low disposable cash so they can have a liveable lifestyle.
That's partially why it exists, it is bad for the economy if someone is a low wage earner and has their disposable income eaten up, as it shrinks the economy.
Well as long as you're ok with it doubling in cost by the time you die and it coming out of your estate then why not?
Although, being born with a silver spoon and an attitude saying you're not intending on ever paying it back won't garner many friends.
I could be wrong though, but won't your partner push your combined income over the threshold and thus you'll be liable to make HECS payments anyway?
Pretty sure you are wrong and partner makes no difference to HECS repayments, also try being less salty.
also try being less salty
Nah
No can do sorry
You must be a cheap a$$. You owed only $12K and you are able to work and make your earning from what the government provided you in the past. And now you try to avoid paying it back. If everyone is like you, there won’t be Australia anymore. Just pay at least $1-2K a year and maybe you won’t owe the government anything before you die.
Barefoot Investor book author says take it to the grave, which is what I will do. Goes away when you die he said. Was so grateful for his book as I was worried about it before then LOL!!
Barefoot Investor book author says take it to the grave,
He didn't, did he?
It's solid advice if he did.
as a tax-payer, and with children who are tax-payers, and hopefully (one day) grand-children who will be tax-payers - pay off your debt
Why do you even have HECS?
It was free to sign up.
looks like you think it is free to keep it!! Pay it or one day govt will come chasing you and fine you for not paying when you have money in bank!
How people talk about tax payers money! even if you pay it, i don't think, I m getting any tax reduction.
Pay it or one day govt will come chasing you and fine you for not paying when you have money in bank!
The feds won't do any of that.
They want to keep people in debt, poor and working. They don't want people broke.
@rektrading: i was call out for paying less tax (2yrs after-tax lodgement) this is was 10yrs ago and gave me 2weeks to pay which I did immediately and I m not rich. Take your chances.
@rektrading: Enjoy till it last and hope you never have to earn more than 47k. It might be painful to pay when you really have to and in your head you are always in Debt too. As I said even if you don't pay I m not getting anything out of it! Just a few comments on OzB.
The fact that this guy has already said he has the money in his account to pay it back would suggest he should pay it back. Surprised so many of you pro gov people are saying to ‘grave it’.
If you have managed to save that amount, one would assume you can continue to save that amount or even more more?
Or why don’t you just wait till the greens become majority government and wipe away any existing student debt of yours :)
While you’re at it why not go take a loan from the bank / loanshark and not pay that back either. Why stop now!
There is another option on the table. You can move overseas, get foreign citizenship or a work visa and earn an income elsewhere.
Technically the government says you still need to pay HECS on your Bagladeshi salary, but they can't really enforce it. You're being paid by a foreign entity in a foreign currency using a foreign bank account. Australian government can just sit on their hands and hope you're dumb enough to hand over some of your income. But obviously you don't need to.
Take it to the grave. It dies with you.
And thats from someone whos already doing the same thing. Practically, you only have to take it to age-pension age no? Im on 25 years done, only 17 years to go.