The Footnotes

THE STUDENT LIFE

HECS explained

HECS debt explained

Don’t know how much HECS debt you owe?

Join the club.

Nearly three quarters of young graduates say they only ‘roughly’ know what they owe.

Do you,

  1. Know how long it will take to pay back what you owe?
  2. Know how much interest you are being charged on your loan?
  3. Knew that ‘b’ was trick question? (HEC’s is interest free)
  4. Know the discount you will receive for voluntary repayments?

Don’t feel bad if you are not in the know, you are not alone.

While, 34% of graduates under 24 years of age aren’t earning enough to make repayments (the threshold is currently $52,00) – only 1 in 6 know exactly what they owe.

Feeling guilty? Here it is, the 411 on HECS.

1. Have you heard of the Commonwealth assistance notice? 

Basically, The CAN includes important information about your enrolment, any HELP debt you have incurred (it will list all your subjects, and tell you how much you forked out for them) student contribution amounts you have paid, and any loan fee you may have incurred.It is a great way to track where your borrowings are at.

2. You have two payment options that will get you a discount when you are studying as a Commonwealth student:

– Get a 10% discount on fees paid upfront over $500 (up to the full fee amount).

– Defer your fees into a HELP-HECS loan (note, you can still get 5% discount for voluntary repayments over $500 at a later date). If you have the cash, why not do it?

3. Should I voluntarily repay my HECs loan?

There are arguments for and against. As, while a $500+ voluntary payment accounts for a 5% discount, there might be better plans for your money. Instead of repaying a HECs loan that is already interest free you might choose to:

Save for a home. Buying a home means your deposit of 20% will control 100% of the house. Simply, if the property increases in value you can gain a larger percentage in returns on your initial cash deposit. Additionally, If you don’t expect to own a home for 4-5 years, you could start a first home buyers savings account, these are usually offered at a higher interest rate – which will make the money work in your favor.

But remember…

It is almost to remember that this debt is interest free… So, If you are planning an overseas trip, it might be cheaper to leave the money as savings, rather than repay HECs and put the trip on your credit card (it’s better to pay 3% HELP loan interest than 20% credit card interest).

 

HECS explained
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