Latest news with #HECSHELP
News.com.au
01-08-2025
- Business
- News.com.au
‘Pressured': 22-year-old Aussie reveals HECS-HELP debt reality after dropping out of university
A young Aussie has slammed indexation and the pressure to attend university, claiming her HECS-HELP debt has tripled since she dropped out. Clio Crowhurst, 22, attended university to study nursing for one semester when she was 18 but dropped out because she wasn't passionate enough about it as a career path. 'I couldn't see myself working in a career where my heart wasn't fully in it,' she told Even though her university education lasted less than half a year, she's still paying for it four years later. 'When I left university after a semester, (my debt) was around $2000. To see it more than triple due to indexation is honestly confronting,' Ms Crowhurst said. The $2000 debt has ballooned now to around $7000, a reality she finds maddening and unfair. 'Don't go to uni if you don't know what you want to do. You're going to be in so much debt,' she warned. The 22-year-old stressed she has zero issues with the fact degrees cost money but the indexation is what she takes issue with. 'Before indexation, I wouldn't have said it felt unreasonable. But now? Yes. I only studied for one semester, and I'm unable to use any of the skills I learned,' she said. Higher education loans in Australia don't charge interest, but they are subject to indexation based on inflation. In 2023, millions of Australians saw their loans increase by a whopping 7.1 per cent — the biggest jump seen in 30 years. In June 2024, the indexation rate was 4.7 per cent. HECS-HELP loans are now indexed in line with either the Consumer Price Index (CPI) or the Wage Price Index (WPI), depending on which figure is smaller, with this change backdated to June 1, 2023. On June 1, 2025, a 3.2 per cent indexation was applied to all student loan debts. However, on Thursday, reforms passed parliament that will see student loan debts slashed by 20 per cent for approximately three million graduates. Ms Crowhurst explained that she had always felt 'pressured' to go to university because it was all she had ever heard her teachers and peers talk about. 'We are so wired at school to focus on our ATAR, which then intern makes us focus on what we're going use our ATAR for in uni,' she said. She never felt hassled by her parents about getting a higher education but she feels, in general, there's so much pressure on young people to finish high school and go straight to university. 'It is such a big decision to take on a degree straight out of school,' she argued. 'I'd honestly encourage (young people) to work in an area they're curious about or even take time to travel. 'There's no rush, follow your heart before committing to something just because it is expected.' She believes that, if she had put more thought into enrolling in university and understood indexation, she might have made a different choice. 'I'm mostly regretful that I didn't fully understand the long-term implications of HECS debt at the time,' she said. 'In high school, we weren't taught how debt, interest, or indexation work. I wish there had been more education around real-world financial literacy, things like tax, credit scores, and loan systems.' Ms Crowhurst added that 18-year-olds are trusted to make 'lifelong decisions' with 'very little real-world context', and she didn't feel she was set up with the tools to navigate things like university confidently. It also stings that she hasn't used practically anything she learned during her short time at university. 'I remember a few health-related facts, but nothing I apply in day-to-day life,' the 22-year-old said. 'I now work professionally as a content creator, PR consultant, and social media manager. Looking back, the degree wasn't worth it for me personally, but I don't think that's a reflection of the field. 'It's more a reflection of how quickly many young people are expected to make huge decisions without the support or education to do so wisely.'
News.com.au
29-07-2025
- Business
- News.com.au
‘Monster amount': 29-year-old Aussie reveals problem with HECS debt
A young Australian woman has claimed that indexation 'is the same as interest' after expressing her annoyance that she still has a 'monster' HECS-HELP debt. Sarah Jane, 29, works a corporate job in Sydney, lives on The Central Coast, and creates social media content on the side. At the moment, she has been exploring sharing financial content with her followers. She recently created a TikTok video revealing how she spent $1600 during a particularly expensive week, with that clip amassing over 100,000 views. Speaking to Ms Jane said she started creating money content because she enjoys watching it herself. There is also a still fair amount of mystery around how other people spend their money, but whenever she speaks with her friends, everyone expresses feeling poor and wonders how other people their age are budgeting. 'We've never made more money and never been poorer,' she said. In Ms Jane's case, while she declined to get into the specifics surrounding her income, she said her HECS-HELP debt, which is currently around $30,000, is something that plagues her. 'I'm the most risk adverse person financially. I don't have a credit card, or a car loan and I don't have any personal debt,' she said. 'HECS was sold to us as teenagers as this interest free loan but indexation is the same as interest.' Higher education loans in Australia don't charge interest, but they are subject to indexation based on inflation. In 2023, millions of Australians saw their loans increase by a whopping 7.1 per cent — the biggest jump seen in 30 years. In June 2024, the indexation rate was 4.7 per cent. HECS-HELP loans are now indexed in line with either the Consumer Price Index (CPI) or the Wage Price Index (WPI), depending on which figure is smaller, with this change backdated to June 1, 2023. On June 1, 2025, a 3.2 per cent indexation was applied to all student loan debts. However, last week, the Labor government introduced a bill to parliament. If passed, it will see student loan debts slashed by 20 per cent for approximately three million graduates. Ms Jane was 24 when she completed her bachelor's degree majoring in media. It took her longer than average to finish because she paused her degree to travel. She's now shocked that, even with five years of full-time work under her belt, she is still paying it off. 'I thought my HECS was not going to be a concern in my life. I'll get a bachelor's degree and I'll work in my industry and pay it off,' she explained. 'It is still $30,000 or something.' Living with that debt hanging over her head means it is a 'bigger piece' of her life than she would like. 'I'm paying off a monster amount of HECS debt,' she said. The 29-year-old said the cost of living crisis has made her notice things like her student debt. 'As someone that gets paid monthly, it feels like it evaporates. The cost of everything has gone up dramatically,' she said. 'I commute from The Central Coast to Sydney and it is $20 just on transport. I bring my lunch and breakfast to work every single day and it still adds up to $40 a day between transport and buying yourself one or two coffees.' Ms Jane said she feels like it is so easy to spend more than you want to as it 'snowballs' and everything costs so much money these days. The young worker claimed that she's a complete type-A personality, with a spreadsheet where she tracks her ingoings and outgoings. However, being diligent often isn't enough. For instance, Ms Jane was 'massively shocked' when she spent $1600 in a single week, as she often only spends $350 a week. The $1600 spend was also a week where she had a few social occasions collide, including her best friend's birthday. 'It was the perfect storm and a one-off week,' she said. What she's most proud of, though, is that she has a firm understanding of her finances, even if she's sometimes stunned by the cost of living. 'I used to find finance really intimidating, I found it really scary and it used to make me massively anxious,' she said. 'The more you understand it the less confronting it is.'
Yahoo
24-07-2025
- Business
- Yahoo
Major Aussie bank's huge $20,000 HECS change for borrowers
NAB has joined Commonwealth Bank in relaxing its borrowing rules for people who have a HECS-HELP debt. The federal government asked banks and financial regulators to ease rules earlier this year to make it easier for those with student loans to get a mortgage. From July 31, NAB has announced that having a student debt of $20,000 or less will no longer affect how much you can borrow for a home loan. That change means Aussies with a HECS-HELP debt could see a boost to their borrowing power. NAB executive for home ownership Matt Dawson said the change would mean more people would be able to own a home faster. RELATED Major update on $5,520 HECS cash boost for millions to lift them out of 'lifetime of debt' The top 10 highest salaries in Australia paying up to $700,000 Centrelink's 'balancing' move could provide cash boost or expose debt 'For too long, HELP debt has been a roadblock for many Australians looking to buy a home,' he said. 'From 31 July, some HELP repayments won't be part of NAB's home lending assessment, so customers can hit the real estate market sooner.' Commonwealth Bank became the first of the Big Four banks to relax rules around student debts in April. The major bank no longer considers HECS debts as part of its serviceability assessments if the debt will be repaid within 12 months. For borrowers with HECS debts due to be repaid within the next five years, the bank is piloting dropping the serviceability buffer to 1 per cent from the current 3 per cent. The serviceability buffer is set by the Australian Prudential Regulation Authority (APRA), with the regulator confirming this week it would remain at the current 3 per cent. That means a lender will normally assess if you can repay a loan at an interest rate 3 per cent higher than current levels. If you were looking at a mortgage with a 6 per cent interest rate, you would need to be able to repay it at 9 per cent. The buffer was previously increased from 2.5 to 3 per cent in October 2021 to protect borrowers when the cash rate was at a rock bottom of 0.1 per cent. How does HECS debt impact home loans? HECS-HELP debt is usually taken into consideration by lenders when assessing your borrowing power. NAB gave an example of how HECS-HELP debt could impact loan calculations, which was submitted to the Senate inquiry in September last year. For a borrower earning $125,000 with average expenses, a credit card with a $5,000 limit and average HECS-HELP debt of $26,500, NAB said the borrowing amount under settings at the time would be $497,000. If the HECS-HELP debt was removed, the maximum borrowing amount would rise to $587,000, a difference of $90,000. HECS debt relief coming for Aussies Labor introduced a bill to slash all HECS HELP debts by 20 per cent this week, following through on a major election promise. The change will impact about three million Australians and means someone with the average HECS debt of $27,600 would see a $5,520 reduction to their debt. This will be backdated to June 1, before this year's indexation was applied. The reform will also raise the threshold at which people need to start repaying their debt from $54,435 to $67,000 and reduce minimum in to access your portfolio
News.com.au
15-07-2025
- Business
- News.com.au
‘Never that high': Why so many Aussies have a tax debt this year
If you are one of the Aussies who has copped a bill after lodging their tax return this year, then you are not alone, with an accountant revealing she has witnessed a significant rise in the number of debts being issued. We are now half way through July and the number of people taking to social media after being told they owe money to the Australian Taxation Office (ATO) has been steadily rising. The tone of their posts range from disappointed to outright furious, but it is clear a significant number of Australians are really unhappy this tax time. Tax Invest Accounting director and tax agent Belinda Raso told she has seen an explosion in people being hit with tax debts, with numbers rising since the end of the low and middle income offset in 2022. Previously, Ms Raso said, people who received a tax bill predominantly knew they were going to be getting one. For example, people who forgot to tell their employer about their HECS-HELP loan, claimed the tax free threshold twice, people with side hustles or those with a positively geared investment property, would be unsurprised by the arrival of a tax bill. But now plenty of unsuspecting Aussies are being hit with unexpected debt. 'Since 2023, I'm not exaggerating, I'm looking at 20 to 30 per cent of clients that are ending up with the tax debt. It was never that high,' the tax agent said. Ms Raso shares a lot of content on social media around tax time and has this year been inundated with messages from people who have no idea why they have received a tax debt. On TikTok alone she says she can get about 20 messages a day from people who owe the ATO money. 'I could be speaking to 30 or 40 people daily that are not even clients, that are begging for help,' she said, adding that she always works to help these people as much as she can. 'It is so prevalent and it's just ordinary Aussies that are employees, and they're wondering, 'Why the hell? What's going on?'' Looking at the comments on some of Ms Raso's videos, you can see just how many people are struggling with tax bills this year. 'My estimate says a $1.9k debt. Can't work out for the life of me why, there's no way I can pay that,' one person said. Another commenter said they got a $1500 bill despite having the same job as previous years where they received refunds. 'Nothing has changed. I made a bit more money this year worked more. But how do I get $1000 returned last year, and now I owe $1500?' they asked. Another said: 'I have two jobs only claim tax free threshold on one and now I owe $1800!' A quick scroll on TikTok will also show dozens of videos of young people expressing lament after their dreams of a healthy tax refund were dashed. One user, Kenneth, said he spent 'five hours, 47 tabs, three breakdowns doing (my) tax return, just to find out I owe $4000 to the ATO'. In the caption of the video he added: 'The only return I got was emotional damage.' Another young worker shared an image showing she owed almost $5800 to the ATO, asking 'wtf is this' and 'no one speak to me'. A nurse made a video revealing his $3404 debt, while another TikToker, Elaya, was hit with a $1733 bill. Another user revealed they owed close to $9000, writing, 'Any accountants wanna help me?' Ms Raso said there are a few main reasons people are copping debts this year, with one of the key culprits being the rise in people taking on multiple jobs. Australian residents are entitled to the tax-free threshold, which means you pay no tax on the first $18,200 of your income. However, it can only be claimed for one job, and for any additional jobs Aussies must inform their employer they will not be claiming the threshold. But the accountant warned that for people with multiple jobs, this is often not enough to avoid being hit with a tax bill at the end of the financial year. 'If your main job is earning $45,000 or more per year, when you tell that employer at your second job that you don't want to claim the tax free threshold, you go to that first tax rate, which is sitting at 16 per cent plus Medicare levy, that automatically defaults to that,' Ms Raso explained. 'So the employee has done the right thing, the employer has done the right thing, but if you're earning $45,000 or above in that main job, you're already sitting at 30 per cent tax rate, plus 2 per cent Medicare levy, so straight up, you've got a 14 per cent difference.' Ms Raso said this hasn't been as significant an issue previously, because fewer people were working multiple jobs and there was the buffer of the low and middle income tax offset. The tax agent sees thousands of people a year and says she is having conversations on this subject almost every day. She said it is 'distressing' when people are having to get second or third jobs just to get by and they think they are doing the right thing in terms of their tax, only to be hit with a bill. 'No one's done anything wrong, but there is no option for them to actually get that extra tax withheld,' Ms Raso said. 'For most people, our tax system is complicated enough. If they have to go and manually work out another 14 or 15 per cent, that's unfair.' Another common issue has to do with HECS-HELP debt. The repayment income threshold is currently sitting at $56,156, meaning you'll only start seeing payments come out of your pay if your salary ticks over that amount. But, if you are earning under the threshold for both jobs, then neither employer will be withholding those repayments. However, the ATO looks at your total taxable income, so if your combined income is above the threshold and you haven't been making repayments, you are going to be hit with a debt. Another situation Ms Raso sees revolves around salary sacrifice, novated leasing and reportable fringe benefits. She said many people don't realise that those reportable fringe benefits get grossed up by 1.88 times, which is going to impact how your HECS-HELP repayments are calculated, with them being repaid at a higher rate. Ms Raso said those are the three main reasons for tax bills she sees every year, and warned people who cop a debt this year are likely to find themselves in the same situation next year, unless they figure out why. 'If it's not addressed, the same thing is going to happen next year. And if you're one of the people that go may not have had a tax debt this year, but have gotten a second job, you'll end up in that situation next year,' she said.
Yahoo
26-05-2025
- Business
- Yahoo
$882 HECS hit arrives for millions of Aussies this week
Three million Australians with student loan debt will see their balances automatically increase this week when the government's yearly indexation is applied. HECS-HELP loans get indexed every year on June 1, and this will still apply despite plans to cut debts by 20 per cent. Unpaid HECS-HELP loans will increase by 3.2 per cent on Sunday, the Australian Taxation Office (ATO) has confirmed. For the average $27,600 debt, this will add about $882 to their loan. The federal government is planning to cut 20 per cent off all student loan debts that exist on June 1, before indexation is applied. This has not yet been legislated, but Prime Minister Anthony Albanese said it would be the 'first piece of legislation' introduced into the new parliament following the election. RELATED Tax cuts, HECS debts, Medicare boost: All the major cost-of-living relief coming for millions of Aussies $3 million superannuation tax change sparks property warning as 'panic' selling begins Most in-demand tradie jobs paying nearly $3,200 per week amid crisis: 'Shining a light' The move would wipe $16 billion in debt across HELP, VET Student Loan, Australian Apprenticeship Support Loan and other income-contingent student support loans. For someone with the average $27,600 debt, they would see around $5,520 wiped from their outstanding loans. The government also plans to increase minimum income thresholds from $54,000 to $67,000 from July would mean someone earning $60,000 would pay around $1,300 less per year in repayments. Last financial year, HECS debt increased by 4 per cent following changes to the way indexation is calculated. Indexation is now capped at whichever is lowest of the Consumer Price Index (CPI) or Wage Price Index (WPI). This was backdated to June 1, 2023, lowering last year's 4.7 per cent rise to 4 per cent and the previous year's 7.1 per cent hike to 3.2 per cent. This will ultimately depend on your individual financial situation. The government said it's worth taking into account the upcoming 20 per cent HECS debt reduction when making your decision. The reduction will only apply to debt balances as at June 1, so if you make a repayment beforehand, you will ultimately get a smaller reduction. 'It may make sense to wait until after the 20 per cent reduction is applied,' the government said. 'Making a voluntary repayment after 1 June 2025 will maximise the impact of your repayment and result in a greater reduction in your HELP debt.' Financial adviser Helen Baker previously told Yahoo Finance it was important to consider your short- and long-term goals before paying off your HECS debt, including any plans to buy property or start a family. 'What tax bracket are you in? What commitments are you looking forward to? What things might change in your lifestyle going forward in the next few years? Look at all that together to work out whether it makes sense and how much makes sense,' she said.
