Mechanical engineer Courtney Sinclair has revealed the stresses of living with a more than $60,000 HECS debt, as an accountant gives advice on reducing your debt.
Indexation on HECS-HELP student loans is expected to hit 7 per cent or more this year. Find out how it will impact you.
The 28-year-old Leopold resident completed an advanced diploma in mechanical engineering, which was partially government subsidised, before transferring into a bachelor of mechanical engineering at Deakin University.
She said her years of study accrued a debt of more than $60,000, with her final year of the bachelor alone costing $15,000.
She is among the millions of people whose HECS-HELP debt jumped on June 1, when indexation increased in line with the consumer price index.
HECS-HELP is a scheme aimed at assisting eligible Commonwealth-supported students to pay their high education student contribution amount with a loan.
Mechanical engineer Courtney Sinclair said it felt like she had been paying 6.5 per cent of her salary over the last financial year “for nothing”. Picture: Supplied
During the Covid-19, the indexation increased 0.8 per cent.
On June 1, the indexation increased 7.1 per cent.
Ms Sinclair’s debt increased by about $4000.
Ms Sinclair said she has a well-paying job and already sat in the bracket of paying 6.5 per cent of her salary to the debt.
“However, the indexation being over 7 per cent means everything that I’ve put in for the last 12 months is gone,” she said.
“I’m just feeling like it’s a little bit defeating, considering that I’m losing 6.5 per cent of my salary for nothing.”
Ms Sinclair said there should be some “slack” for fresh graduates beginning to pay off the debt.
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She said one stopgap could be five years tax free.
“I was fresh out of university, earning $43,000 and then started paying HECS not long after that,” she said.
“We didn’t really get a chance to find our feet.
“I think if we got five years tax free, a lot of people would pay it down.
“If that was an option for me, I think I would be paying it down and then I could make voluntary contributions on top, and it would be getting removed, as opposed to getting the indexation of 7 per cent.
“Essentially we’re putting into this, and getting nowhere.”
Ms Sinclair said the indexation increase occurring amid the rising cost of living was frustrating because it meant she was more limited.
“With everything else going up, it’s just meaning that I don’t have as much flexibility,” she said.
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“It does hit home a bit.
“I’m lucky that I am a bit of a high income earner, so it’s not affecting me as greatly as it’s affecting others, but it’s still really unfortunate.”
Findex partner Adam Murray said there was no “silver bullet” with the uplift already applied to accounts across the country.
“It’s obviously very difficult at the moment with inflation levels and the rising cost of living,” he told the Geelong Advertiser.
“Everyone needs to look at their own situation and see where they can make savings.”
According to ITP Accounting Professionals, people with HECS debt can keep all work-related receipts and claim deductions for everything they’re entitled to in order to reduce taxable income and minimise the yearly repayment.
The group also recommend consulting an accountant or tax consultant to find the best route for you.
Education Minister Jason Clare told News Corp it was important to remember the loans were not required to be repaid “until a person reaches the income repayment threshold”.
The threshold is currently $48,361.
“It’s built on a really important principle – you pay what you can afford,” he said.
“And you don’t pay more unless you earn more.”
However, opposition education spokeswoman Sarah Henderson hit out at the federal government for the “crippling” increase.
“The government should seriously examine what options can be taken to support young Australians pay down their debts, instead of denying it’s a problem,” she said.
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