HECS Indexation June FY24 Credit

Lkoo88 on 05/05/2024 - 13:00

According to today’s news, those with a HECS debit that were indexed June 2023 at 7.1% will be backdated with credit.

On the SBS page a paragraph states

All HELP debts that were indexed in 2023 and would be subject to indexation on 1 June 2024, would get an indexation credit, the government said.

I was planning to pay my HECS debt off not wanting to experience another indexation like last years. If I did pay it off before indexation, would i still be eligible for the credit or miss out on it in total? Would I avoid this year’s indexation and be up for a larger credit? Does anyone know the answer to this before June’s indexation?

Financial HECS-HELP

Comments

  • Shadowsfury on 05/05/2024 - 13:02
    +1

    You have until the end of the month to pay it off and avoid indexation right? Let the legislation become a bit clearer - and this stage its only been announced/leaked so there's still a while before all the details get finalised.

    • AustriaBargain on 05/05/2024 - 13:07
      -7

      Nah, this small concession is a vote winner and only cost 3 billion, it's a lock.

    • koo88 on 05/05/2024 - 13:11

      You’re right. There’s still time and it’s still unclear. If eligibility requires still having a balance I’d consider leaving a small nominal amount so I don’t get slapped with this year’s indexation component.

      • cheaplee on 05/05/2024 - 13:36

        That's a good idea actually.

        I would have paid off my remaining balance in Jan/Feb as part of ordinary PAYG so I told my workplace I no longer have a HECS debt to stop further withholding. I was also planning on paying it off early, knowing I 'should' get all of the voluntary repayment back.

        I might still make a voluntary payment minus the expected credit so there is still an active account to credit into.

        • kyle on 07/05/2024 - 07:53

          Technically you couldn't tell your employer that because the extra PAYG taken doesn't get credited to your debt until you lodge your return.

          • cheaplee on 07/05/2024 - 09:04

            @kyle: Correct.

            Although I am/was planning to pay it off as a voluntary repayment prior to indexation.

            If I had already paid it off via voluntary payment I presume I could tell me workplace I no longer have HECS debt.

            By telling them early I'm trying to prevent them withholding an extra $10,000, then me paying another $10,000 voluntarily, both on top of the $10,000 they would have already withheld YTD. I don't really to pay $30,000 for a $10,000 debt. Even though I know I'll get it back I'd rather just keep it in the first place.

            • kyle on 07/05/2024 - 09:57

              @cheaplee: What I meant was when you fill in a few TFN declaration to tell the employer you no longer have a debt, at that point, you still have a debt despite the repayments being taken out of your pay, so you couldn't have made that declaration truthfully and tell them early.

              • cheaplee on 07/05/2024 - 11:08

                @kyle: You are 100% correct, I still have a debt on paper.

                I have also made all the necessary payments to clear that debt. I don't want to be disadvantaged by the fact it takes the ATO takes 12 months to apply payments already made (thinking about the first PAYG of the FY).

      • larndis on 06/05/2024 - 08:16

        There is still time for the details to be cleared up but leaving a small balance would be the safest option, in case there is some difference in treatment between those with and without a balance at 1 June.

  • foxmulder on 05/05/2024 - 13:33
    +2

    If you paid off last year one meaning you won't get credits. Only those who paid 7% will get credits.

  • freefall101 on 05/05/2024 - 13:34
    +3

    It'll likely be minimal difference. If they go with the lower of CPI/WPI it'll likely be around 4.2% this year (WPI numbers aren't out for the March quarter yet). If they drop last years by what the article says, 7.1% to 3.2%, it's a 3.9% saving but on the higher balance you carried last year.

    Might as well pay it, because if the legislation doesn't pass for any reason you'll be hit with 4.8% this year. However the government wouldn't be making this a grand pre-budget announcement if they weren't sure it'd go through. The Greens will support debt relief for students no matter what form it comes in and that'll get it through.

  • avoidfullprice on 05/05/2024 - 13:54
    +1

    If I did pay it off before indexation, would i still be eligible for the credit or miss out on it in total?

    I’ve not seen the details of legislation , but last FY credit will be irrespective to your action this month.

    Check your HECS statement, find the line that says HECS indexation on 1 June 2023. It is that line which will get you the credit.

    I think what quoted line from SBS meant is if you still have a balance by 1 June 2024, then for every $107.10 the $4 gets indexed this year too so you will have that indexation reverse effectively as this years credit.

    You are not better off by leaving a balance

  • Lunarboogie on 05/05/2024 - 18:57

    I'm glad this change has come in but I wished it was more courageous. Young people disproportionately get the rough end of the pineapple.

  • mskeggs on 05/05/2024 - 19:26
    +10

    I’m irrationally annoyed by this policy change.
    I benefitted from low HECS fees, and I understand they are much higher now. It took me about 12 years to pay off, from memory.
    But HECS is legitimately a good deal - your borrowed dollar is never costing more than it did when you borrowed it, and you never have to pay back more than 5% of your income.

    It frustrates me the arguments for change are shallow, dumb and self centered. “My mortgage borrowing capacity is slightly lower due to HECS compared to somebody who had the same income but no degree(?).
    “The index is high, that sux.”

    “I was told it was good debt, but I have only worked in low paid jobs, and the number has gone up.”

    I am very sympathetic to the idea that tertiary education should be free for all - that would be a good policy to encourage higher learning. Just say that. Better than saying you are financially illiterate and just feel like you should get a hand out.

    I’d be happy to hear arguments for this change, so I am not so annoyed!

    • brendanm on 05/05/2024 - 19:54
      +9

      "wah I got an interest free loan so I can better myself with higher education, and get a better and higher paying job, but now I have to pay it back like I agreed to and I don't like that ☹️"

    • nedski on 05/05/2024 - 19:56
      +13

      I remember a comic of a guy that had cancer and underwent treatment and beat it. The next frame of the comic saw the guy saying "Now if they find the cure for cancer, I am going to be really pissed off". Then there is a * saying this the same for people who have paid off their student loans.

      You sir, are that guy!

      If we can make things a little easier for the younger generation, why not? The world is already hard enough as it is.

      • mskeggs on 05/05/2024 - 21:07

        I’m a strong supporter of free tertiary education, and I support forgiving all HECS/HELP debts as part of that.
        What I think I find irritating is the arguments being used for some “relief”.
        HECS/HELP is structured so repayments never become a big part of income, and if the bit it stops you getting on a mortgage, well, the extra income you gained from tertiary education likely far outweighs it.

        And almost by definition, people with HECS debts are going to either be above average earners, or on their way to it.

        So I feel fine, use the argument to fight for free education across the board, or cop the deal you chose. But “things are tough” so tertiary educated adults are the most deserving of a multi-billion dollar hand out is sloppy thinking.

        • singleword on 06/05/2024 - 10:16
          +1

          Saying you're all for free tertiary education then describing it as a "handout" is… certainly a take.

          Also I don't know where you're getting the impression that everyone with a HECS debt is a high income earner - everyone I know with a degree (including Masters and Doctorates) is also living below the poverty line.

          • mskeggs on 06/05/2024 - 11:13
            +4

            @singleword: Are you seriously arguing because you only know people on low incomes, tertiary education does not lead to higher incomes?
            The change in indexing is a little handout, and of no consequence to people living below the poverty line who make nil repayments.
            I'll repeat, I find the arguments disingenuous, changing the index rate because inflation was high is not getting an outcome helping low income people, as free tertiary education would.
            It offers a thimble of help to those earning over $50k.

            I understand a lot of student debt jubilee arguments come from America, but most don't apply here.
            This indexing change benefits higher earners and those with the largest debts most, not those who need it most.

          • mrfuku on 06/05/2024 - 22:58

            @singleword: Perhaps you need to get out there and meet some new people……

            Everyone I know with a degree is above the average income, many of them are probably in the top tax bracket.

            If all the people you know are below the poverty line HECS shouldn't affect them that much since its a %% basis and not a flat rate…

    • Benoffie on 05/05/2024 - 20:02
      +8

      As a teacher in SA who cannot secure permanency, my HECS is about to hit $50k (secondary education).

      Ive never been able to hit the threshold working for the DfE.

      Recently reapplied for a mortgage and my casual employment and that HECS debt were both huge impacts to the loan. It essentially halved our borrowing capacity. I get it but I dont like it.

      I understand people dont like the idea of wiping HECS debts. I hear the 'oh but us taxpayers will have to pay for that' cries all the time.

      However:

      • its a manufactured debt. It's not the actual cost of delivering the education charged at the time ( per subject pricing)
      • wiping HECS allows people, vast majority of them are taxpayers, to put that money into other things

      If HECS wiping is unpalatable, then the following should be considered:

      • wiping all interest and making people only pay the actual cost with 0% interest loans or
      • offering 1 free UG degree pp (96 credits)
      • restarting lump sum payment discounts

      If I only had to pay for my actual degree cost, Id be happy with that.

      • mskeggs on 05/05/2024 - 21:14
        +4

        First degree free is a very interesting idea. I think one of the things that prevents conservatives supporting free tertiary education is the stereotype of a “professional” student who uses many years of uni to avoid work (I don’t know if this is even possible these days with limited austudy).
        It seems like everyone getting 96 credits, or whatever a first qualification equates to, would be broadly popular.

      • larndis on 06/05/2024 - 08:12
        +1

        How do you know the actual cost of your degree? Is that published somewhere?

        • larndis on 06/05/2024 - 08:24
          -1

          @Benoffie

          How did you rack up that much debt? 2024 rates for education are $4,445. That is the student cost after the Commonwealth contribution.

          • Benoffie on 06/05/2024 - 09:06
            +1

            @larndis: Dont know where you're getting those numbers from. Average Humanities subjects are now over $2000 each after contributions.

            I retrained as a teacher which requires a double degree in SA for high school. With no education discounts at the time, it wasn't cheap.

            If i were to do it again today, while the education subjects would be $555, they are maybe 12 subjects? Out of 4 years. The rest would run at the higher rate (assuming double degree not masters)

      • greatlamp on 06/05/2024 - 22:01
        +2

        It's not a manufactured debt? That money is gone, it was paid to universities. Universities also got additional funding for each subject you studied, HECS is a loan for subsidised price education.

      • kyle on 07/05/2024 - 08:01
        +1

        If you only pay for the actual cost of the degree, then you pay it upfront. Otherwise, who's paying for the time value of money?

      • Alice McGregor on 07/05/2024 - 20:54

        Ive never been able to hit the threshold working for the DfE.

        Recently reapplied for a mortgage and my casual employment and that HECS debt were both huge impacts to the loan.

        • HECS repayments of 1% kick in at $51k.
        • At $51k Commonwealth reckon you can borrow $255k
        • At 1% less than $51k you can borrow $252k.

        From this it seems like your HECS debt reduces borrowing power by $3000. BUT you claim youre not even at the repayment threshold. Which means 0% goes to HECS. So your borrowing power is reduced by $0.

        You struggle to get a mortgage because you're a casual making little money. Not because of your HECS.

    • rumblytangara on 05/05/2024 - 20:39
      +5

      Pretty much agreed with the sentiments there.

      I've been out of the country for decades, and I've come back to discover that tertiary education has turned into some huge cash cow for sucking money out of overseas students (as well as providing a backdoor immigration path), rather than a way of promoting an egalitarian society.

    • 400TX on 06/05/2024 - 08:46
      +4

      I'd have some sympathy for your arguments if those in power had approached tertiary education in good faith but they haven't.

      Both sides of politics have played games with the university sector, but the Coalition have been particularly brazen.

      First Howard introducing bands for different courses and then the Morrison "government" arbitrarily ratcheting up the cost of courses that weren't ideologically compatible with their world view. That's just two of the most egregious among many. None of these changes have benefitted students.

      Any change that benefits students—even this fairly minor one—is a good thing in my book.

    • njastar on 06/05/2024 - 09:11
      +11

      I have quite a high HECS (~50k), which I will be paying for a long time.

      What is not fair about paying the fee off is the combination of high indexation on high HECS balances and the fact indexation happens before my installments. It's ridiculous that money is taken out of my paycheck each week, but isn't applied till after each years indexation. It means people who have large balances can't pay the loan off, because the money that goes in is negated by the huge indexation.

      I think changing that will fix a lot of strain people are feeling.

    • aliceisstupid on 07/05/2024 - 06:44

      Never have to pay more than 5%? How long ago was that? I was paying it at 10% pretax in 2019, it’s a decent whack

      • mskeggs on 07/05/2024 - 07:20

        Apologies, you are correct. It does get that high for earnings over $150k.

  • JIMB0 on 05/05/2024 - 21:00
    -3

    I worked while studying and paid my fees in full before indexation was applied. Can I get a handout as well. It's only fair.

    • Benoffie on 05/05/2024 - 22:40
      +4

      Not everyone has that luxury. Teachers and nurses for example, spend large portions of their degrees on mandatory unpaid placements.

      And as female heavy workforces that also have large numbers of career changers, many were like me and raised a family while studying.

    • brendanm on 05/05/2024 - 23:33
      -1

      I didn't get a degree at all, but my taxes pay for everyone else's, where's my handout? My wife is doing a degree, and paying it as she goes, she needs a handout as well. Handouts for all!

      • brifog on 06/05/2024 - 10:25
        +4

        So if you don't directly benefit from every single tax payer money being spent then you'll complain? Sounds like you must be incredibly busy!

        • brendanm on 06/05/2024 - 12:22

          Not at all. Surely people who have a degree, and thus have higher earning potential, can pay their own way. They whine about HECS indexation, and how the minimum payment doesn't cover it, here's an idea, pay back more of it.

          • Assburg on 07/05/2024 - 00:01

            @brendanm: If you like the idea of living and working in a country with far less tertiary-educated people…that's fine…Though the earning potential of everyone will sink through the floor in such a state.

            I don't think you understand the indexation issue: the minimum HECS repayments get taken every paycheque over the year, then indexation gets applied to the account on June 30, and then your repayments get applied after the indexation is calculated.

            I am pretty sure that's how loan sharks do business.

            • brendanm on 07/05/2024 - 07:52

              @Assburg: Less tertiary educated people? There are plenty at the moment with the way things are, and plenty of them are completely useless. If they can't figure out the very basic maths involved in figuring out ROI, they probably shouldn't be doing higher education. There was one whinging in an ABC article that they had over $100k in debt after doing 3 journalism degrees. Hurray, spend $100k to get $60k a year.

              I don't agree with how the payments and indexation works, the payments through the year should pay down the principal amount as they go, however that's also how tax works, and no one seems to complain about that. It's similar to the minum repayment for credit cards. I'd you are stupid enough to only pay the minimum, you'll be paying forever.

              • kyle on 07/05/2024 - 08:07
                +1

                @brendanm: They are professional students. I've come across a few in my lifetime

                • JIMB0 on 07/05/2024 - 12:05

                  @kyle: They have plenty of qualifications but no experience.

              • Assburg on 07/05/2024 - 08:15

                @brendanm: Yep .. plenty of them and, more often than not they also advocate for better working conditions and higher minimum wages for everyone.

                While I agree, there are a few useless ones who come out of the system, they are certainly the minority. It's the same for any other demographic.

                Really, what you're suggesting here is for people who are in high school, yet to turn 18, who have everyone around them pushing them towards uni to figure out what's going to be a good job and which degrees lead to those good jobs.

                Sure they generally sign onto their HECS after they turn 18 but that's just how the human mind works, you spend a couple years thinking you need to do a certain thing and then you'll do it regardless of the consequences.

                It's easy to simplify it in the case of whoever did their journalism degree, but they're still in the minority, and maybe in many cases you're absolutely right. Still, it's not fair to discount the predatory nature of universities and the fact they get given access to minors to spruic their crap.

                Re indexation, my apologies it's clearly a 29 day gap between indexation and your funds being applied.

                • brendanm on 07/05/2024 - 08:37

                  @Assburg: I'm now not sure what you are suggesting. Tertiary education is great, but unis are crap and predatory? My son and wife are currently doing uni, some of the stuff in my wife's degree is hilarious. She is doing social work, they tell people that their may be triggers during lectures, so that they can leave. These are people that are going to go out I to the world, to try and help people who are facing "triggering" situations every single day. These people should not be doing this degree, yet here we are.

                  • Assburg on 07/05/2024 - 08:57

                    @brendanm: Tertiary education is necessary for us, as a society, to have nice things.

                    It's sad that our government allowed the universities to turn into purely commercial ventures so, STEM degrees, as well as law, economics, languages and political science do require people to jump through some of these pretty silly hoops.

                    But, the point is pretty simple, do you really think 17/18 year old kids sign up to these degrees thinking they're full of trigger warnings and other crap that has no relevance to their degree?

                    • brendanm on 07/05/2024 - 10:18

                      @Assburg: I agree with you, for skills that are in demand, we should be incentivising smart people to do degrees that fill these positions. I also agree that unis are just a money machine now.

                      But, the point is pretty simple, do you really think 17/18 year old kids sign up to these degrees thinking they're full of trigger warnings and other crap that has no relevance to their degree?

                      If they do a little bit of research, yes, they should be able to find this out. I even give people who have done one degree are a complaining a free pass, as you say, they were young and may have been misled. However "career students" and silly people like the journalist I mentioned above, deserve no sympathy, and no taxpayer money.

                      • Assburg on 07/05/2024 - 13:53

                        @brendanm: Ah then, I guess we're pretty much of the same views. Incentives are probably the answer. It'd be nice to see nursing and teaching made fee free so that anyone who does their hobby degree can then go on to get a job supporting the country's critical institutions and services in some capacity.

            • kyle on 07/05/2024 - 08:06

              @Assburg: Indexation is applied 1 June

  • miwahni on 05/05/2024 - 21:18
    +3

    OP on the news tonight Jason Clare was saying that if you paid your HECS off completely in the current financial year, you'll get a tax credit for the indexed rebate amount.

  • Benno007 on 06/05/2024 - 08:12
    -3

    The government could have done this before indexation last year, before people who knew it was coming decided to pay it off early to avoid indexation, but no, they watched for a whole year (2022) while the cost of everything rose and did nothing at all to balance the impact across the demographics (just mortgage holders and renters)… federal election next year so trying to bribe people with the recency effect.

    • foursaken on 06/05/2024 - 13:30

      Exactly! As if they didn't know what the budget would be a year later, they had to wait and see when they knew they'd have money to do this! Those of us non mortgage holders and non renters always get shafted. Bastards.

  • pandadude on 06/05/2024 - 08:58

    Note currently this is only a promise. Like the the majority of budget these are promise until the law that supports the budget is passed.

    We the public won't know the actual rules until the law has been passed.

    Generally it takes a year to pass the budget but during covid magically the laws can be passed in a few weeks.

    Payment for hecs need to be recieve before the 1st of June to prevent this year indexation.

    • 400TX on 06/05/2024 - 19:23
      +4

      Generally it takes a year to pass the budget but during covid magically the laws can be passed in a few weeks.

      No, the Appropriations Bills (the "Budget") is usually passed before the end of the financial year. So if this policy is a budget policy and meant to take effect as promised for the next round of indexation (and retrospectively for last year), it'll pass both houses of parliament before June 30, with an indexation credit being applied for 2024 and 2023 (if I'm understanding the information released so far correctly.

  • kyle on 07/05/2024 - 08:14
    +1

    So if you've paid it off after 1 June 2023, you'll get a tax credit https://www.news.com.au/finance/money/costs/will-i-get-a-ref…

    • whey4000 on 14/05/2024 - 19:46

      Has this been officially announced as yet, need to know if I should pay off the remainder of my hecs before 31st May this year

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