Our Financial Counselling is a non-judgmental, independent, confidential and free service provided to inform, support and advocate for students experiencing financial difficulty. Contact us to arrange a free appointment.
Generally speaking, the HECS-HELP debt is a pretty inexpensive form of debt. HECS-HELP debts don't attract interest, but they are indexed to inflation. The rate is based on the consumer price index (CPI), a measure of the cost of living.
In the past, the indexation rate averaged about 2 per cent — roughly half the rate of the increase in 2022 which is expected to be about 3.9 per cent. The indexation keeps the debt the same value in real terms i.e. after inflation.
When working out whether you should repay your HECS-HELP debt early, keep in mind that the HECS-HELP debt is flexible. If you lose your job, for example, you won't have to make repayments. Whereas if you have a car loan, a mortgage or a credit card debt, you will have to keep paying regardless - the repayment terms do not change.
If you don't have other debts, and you have some surplus cash, it's important to weigh up repaying your HECS-HELP with other options. If you're paying it off, you've got a guaranteed return of 3.9 per cent, but there's no ability to redraw, there's no prospect of achieving any long-term growth, and there's also no tax saving.
Most importantly, speak with a trusted family member or your accountant about your individual circumstances when making your decision.
Financial Counsellors help people who are experiencing financial difficulty. They are skilled professionals who will guide you through your options and help you plan your way out of debt. They may be able to assist you by:
They can provide information and advice about:
It’s then up to you to make the decisions about how to manage your situation with the advice you’ve been given.