Already a subscriber?Graduates with outstanding tuition debt should do the maths on whether to bring forward repayments because if they get in quick, they can save hundreds of dollars by nabbing lower indexation, financial advisers say.
Because the rate at which loans are repaid is contingent on income, the tweak won’t mean borrowers pay less. That is, the amount a borrower pays off in a given year is unrelated to the size of the debt. As a rough example, in the 2023-24 year, a graduate earning $100,000 would have a HELP repayment rate of 6 per cent, so they’d technically be required to pay $6000 – regardless of whether they owed $20,000 or $8000.
“Leaving uni and having a massive debt over your head is a pretty average way to start in the workforce,” Taylor says, although he appreciates the expectation that people pay for their education is reasonable. The obvious upshot of that is that while that worker gets a reprieve, they also repay less of their debt, and pay off their debts slower, says Andrew Norton, a professor of higher education policy at the Australian National University.In the meantime, though, because of the stage three tax cuts that same person earning just over $100,000 would have an extra $2680 in their pocket every year, according to modelling by Norton .
“You need to allow four business days for processing so make the payment by May 27 at latest,” she says. “Any credits for payments made throughout the year will be refunded to you after you lodge your tax return. Don’t make the mistake of waiting until the end of the financial year as that will be too late.”Paul Feeney of advice platform Otivo adds that while paying it off in a lump sum will save money on accrued interest over time, it’s worth considering the middle-ground.
Keryn Batsilas from Your Life & Money Matters says a good rule of thumb is that unless you have a good amount of savings and a regular income, and have been feeling comfortable for a reasonable period, paying off a student debt generally shouldn’t be a priority.
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