How to pay off your HECS Debt from UNI
Not everyone has the ability to pay their HECS (Higher Education Contribution Scheme) bill upfront, but that doesn’t mean that there aren’t ways you can reduce your HECS debt as you go.
Firstly it is important to see your HECS debt not as a burden but an investment in your career and future. By keeping a positive attitude about it, you will be able to budget more for it and find ways to live around it whilst paying your debt off quickly and easily.
Saving Money on University
Firstly – this will only relate to some lucky people, but remember that thanks to the new federal government incentive scheme, maths and science bachelor degrees have become much more affordable at almost half the price.
For these graduates you can also half your HECS repayments after university by undertaking employment in these fields. Other fields of study also have lower HECS fees depending on what band they are in so it is worth researching these options before entering university.
For other people who are not interested in pursuing these areas there are other ways to save money on uni.
If you are lucky enough to be able to afford to pay the full amount of each subject upfront (or even partial if its over $500), you can receive a 20% reduction in fees. Not only do you finish university without owing money, you also pay less then someone else who has deferred all of their payments.
The majority of students do defer their HECS simply because they do not have available funds or need to use their income on other priorities.
Paying back HECS
Once you begin work and your income is over $ $41,595 the ATO will deduct 4% of your annual income, rising incrementally to 8% if your annual income exceeds $77,248.
If you are unable to make full repayments you can make voluntary payments after graduation which if over $500 you are able to receive a 10% bonus amount. So if you pay $700 voluntarily you will also receive a $70 bonus payment, reducing your debt by $770.
Methods to pay back your HECS Debt
These voluntary repayments may seem like large amounts, but try things such as using an unexpected work bonus and putting it straight onto your HECS. Since you did not budget on it in the first place, it will make little difference to your bank balance.
You could also take advantage of the bonus scheme by setting up a separate bank account and filtering small amounts of your pay into it each week/fortnight/month. If you put as little as $10 in each week by the end of the year you have the minimum amount to pay a voluntary sum and as such receive the bonus payment.
One good thing to remember is that the HECS debt does not accumulate interest so if you are not in the position to pay off large amounts, you will not be worse off. It is therefore not a good idea to get a loan or pay it off via another method which will accrue interest rates. It does however rise with inflation but so too should your income-either way the sooner you pay it off the better, leaving you able to save for other things for your future such as a car or house.
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One Response for How to pay off your HECS Debt from UNI
If you are lucky enough to be able to afford to pay the full amount of each subject upfront (or even partial if its over $500), you can receive a 20% reduction in fees. Not only do you finish university without owing money, you also pay less then someone else who has deferred all of their payments.
My question – how do you actually do this part – who do you contact to get the 20% reduction???
