STUDENT loans are a hot topic at the moment. Most often called HECS the reason for all the fuss is
that the annual indexation increase is set to take effect on June 1.
Indexation means that the amount you owe will increase.
Given this is based on the inflation rate, the indexation level this year will be the highest we’ve seen for a long while.
For many with a HECS debt, this will wipe out all the payments they’ve made during the previous year.
Is a degree worth it? If you are academically inclined, it is still worth going to Uni.
Completing a degree is associated with higher lifetime earnings and improved employment prospects.
According to 2021 data from the Australian Bureau of Statistics, the median weekly income for a person with a bachelor’s degree is over $500 more than a high school graduate.
However, earnings and employment outcomes vary a lot depending on the field of study, industry, and individual circumstances.
Some fields and industries pay more than others, and not all graduates find work in their desired field immediately after graduation.
Overall, the decision to pursue tertiary education should be based on individual goals, financial circumstances, and research into potential career paths.
For example, if you’re better on the tools, then you can make an excellent living as a tradie, in which case a TAFE course plus an apprenticeship is a viable pathway.
Despite the scary headlines about indexation, it’s essential to stay positive, take control of your finances, and work on the things you can.
One of the most effective ways to get rid of your HECS debt is make extra repayments.
Even small amounts will have a significant impact in the long run.
Just $20 a week is over $1,000 extra in a year.
This reduces the amount of future indexation and shortens your pay off time.
If you’re going to make any extra payments, these should be processed well before the end of May.
The reason is that this will reduce the loan before the indexation gets calculated as of June 1.
Control Cashflow Working with a budget means you’re in charge of your money and you get to set the rules.
Far from feeling restricted, you’ll feel empowered to move ahead.
This is where you can find the opportunities to save more and also accelerate repayments.
While repaying your HECS debt can be a daunting prospect, you can make small yet powerful extra repayments that will achieve big results.
Don’t put your head in the sand and avoid stressing about how long it might take.
Instead get started today and plan for indexation increases. With smart planning and the right actions, you can pave the way for a successful future.
