Читать книгу Sort Your Money Out - Glen James - Страница 33

Many people under 35 carry HECS/HELP debt — and that's okay. Even if you are over this age, it is still okay. Investing in education is fantastic because it can improve your opportunities in the employment market. If you're working in the area of your study, you've probably found it was a great investment. If not, don't worry — HECS/HELP debt is a very inexpensive loan from the government.

I don't believe you should rush to pay your HECS/HELP debt off because it currently isn't charged interest. However, every year on 1 June the ATO does apply ‘indexation’ to HECS and HELP debt. This means that your HECS/HELP debt is adjusted each year so the debt maintains its real value to keep up with changes in the cost of living in Australia. The government has loaned you money for your studies and annual indexation ensures that the government doesn't lose money to inflation over time. In 2021 the indexation rate was 0.6 per cent and there were different repayment rates (ranging from 1 to 10 per cent) depending on your annual income.

For example, if your debt was $25 000 on 1 June 2021 the ATO would apply the indexation rate of 0.6 per cent and increase your HECS debt by $150 ($25 000 multiplied by 0.6 per cent). An annual income of $60 000 attracts a compulsory repayment rate of 2.5 per cent, which means that your employer would withhold $1500 to give to the ATO. This would have been applied against your HECS/HELP debt when you filed your tax return for 2021.

You may think it will take 20 years to pay off the HECS/HELP debt at that rate, but if your salary doesn't increase at all over 20 years, you may have bigger problems to worry about!

Two other reasons for not paying off this ‘indexed loan’ with voluntary payments are as follows:

 Any debt dies with you (RIP). Any extra payments made towards your HECS/HELP debt will not flow through to family or dependants following your premature death. You could have paid that extra money down on your mortgage, super contributions or other investments — and that money would then flow through to your estate beneficiaries (as either cash or assets, which may have possibly grown over time).

 Voluntary HECS/HELP repayments are not tax deductible to you. You can't claim them on your tax return and benefit from paying less tax.

It is my prediction that at some stage in the future a new government will move to change the current policy so that a deceased person's estate must clear the remaining debt. But even if this does occur, I would not change my view on not paying it down early.

To be clear: you can't inherit HECS/HELP debt!

In terms of your HECS/HELP debt, the repayment amount is only based on your income, not the total amount of outstanding debt. This means, regardless of whether your HECS/HELP debt is $150 000 or $5000, the compulsory repayment amount would be the same.