Hi all,
Amidst the Coronavirus pandemic and economic impacts, I had gotten me thinking what the Government should do (if anything) regarding HECS repayments.
I'm still formulating my opinion, but it seems like a potential area for the Government to target some form of stimulus.
Keen to hear what thoughts are out there on this
Logic checks out, I agree
Agree hecs debt should be doubled
Then why make this poll?
then why did you ask?
Might be reasonable to allow the threshold to be calculated against household income in these times.
But I agree. Payments are fair as is.
The current government hand outs should be repaid HECS style once people get back on their feet.
Because after all this, most wont save a cent for the next 'rainy day' and over extend every aspect of their lives because they can just expect hand outs every time something goes pear shaped!
HECS threshold might be adjusted at some stage depending on how hard this recession hits, but don't be surprised if its lowered as a 45K income might be considered pretty good or above average soon.
@ John Dough
they can just expect hand outs every time something goes pear shaped!
You say this because of a once-in-a-lifetime situation?
What exactly are governments actually for, if not to provide benefit for their citizens? Otherwise we could just all live in a Somalia-like anarchy controlled by warlords.
Interestingly, the template for this current 'hand out', as you call it, was the economic stimulus which occurred at the time of the GFC. Australia happened to ride out that fairly minor economic 'distaster' better than just about any other country; since then the stock market has risen to record levels, property values at a peak, corporate profits unmatched.
It is not impossible that this even-greater stimulus may also lead to utlimate longer-term beneficial impact, as well as smoothing the current difficulties faced by millions.
If you wish to rail against 'handouts' you may consider the largely undeserved (and unneeded) mass of middle class welfare. (Oops, I should say, successive electoral bribes.)
Wages have grown here even less than in the US, etc. That is why corporate profits were up. Plus we have more immigration than anywhere, which is why house prices and corporate profits rose. What did immigration do for ordinary Australians, not much.
A once in a lifetime situation, then you make the connection to something that happened previously.
Which is it?
The current situation is nothing like what happened during the GFC, Australia was in a much better economic state back then, it was not stimulus alone that helped Australia through that like you make it out to be. It was a combination of things and Australia was situated so much better back then with assets, mining boom and endless budget surplus and the financial wealth to stimulate the economy.
Stimulating the economy at the moment is simply taking us further into debt (uncharted territory)
You are entitled to your opinion (as am I) but don't go spouting the above like it's fact, as it is not.
Doesn't it also get indexed annually? So if you were in the unfortunate position of losing your job, the debt could increase, leaving you with more to pay once you gain employment again?
It rises at the rate of inflation. So in reality your debt remains constant as the value of the AUD is always decreasing.
Used to be the cheapest loan, but once the effects of excess QE kick in, we're going to see some pretty big inflation.
doesn't it go up due to inflation if your income can't keep up?
Why?
If you don’t work then you don’t pay. Why change something that already works?
Government should continue to enforce payment
Sounds like someone just wants to cash in on the situation for their own benefit.
Errr, who doesn't?
Who doesn’t? The dead!
yeah look at China the whole country is trying to cash in
Not sure what extra stimulus you want regarding HECS? I think our current HECS system is one of the most fairest in the world. You get a (basically) free University education and you only have to pay it back once you achieve an income threshold that is deemed enough to start to pay back society that education debt.
There is nothing vaguely free about University education in Australia.
Agreed it's not free, but it's a combination of subsidised tertiary education (in terms of CSP or whatever it's called now) and a deferred payment plan until you earn an income which is indexed in line with inflation.
It's significantly better than many other countries where it's on the individual to take out loans themselves (without such generous interest or repayment terms) to pay for an expensive education.
I said "basically" free. Trust me, I came from a low socio economic background and racked up a sizaable HECS debt. But I am eternally grateful for this system provided. Having my parents migrate from a third world country where education is truly for the rich and my parents missed out on a education. I do know how well The Australian system is compared to other system. This system will only continue to last if people who can afford it, pay back what society has provided to them, if and when their circumstances allow it.
The only issue is that the lack of upfront costs means prices for courses have been increasing unnecessarily. But yeah the actual loan and repayment system is one of the best. The government needs to step in though with tougher controls on pricing and quality.
still not basically free though..
No education in Australia is free
I can teach you how to lose money, absolutely no charge. Lesson one: gimme $50.
University Education is Free if you never reach the Income threshold to pay it back
Uni was obviously wasted on you. On one hand you claim it's basically free and then at the end of the same sentence you say you have to pay it back (once conditions are met). You might want to go back to primary school and learn the definition of free!!!
$850 bucks a week is not really much money to be deemed enough to start paying back HECS though is it? Especially when it's been deemed by those who didn't have HECS debt in the first place.
And LOWERING that income threshold will be a soft target for the government to bring in more money in order to help offset the significantly increased welfare payments this year.
So OPTION 5 in the Poll
They just lowered the threshold this year (FY20). They also expanded to top so max repayment is now 10%. We don’t need to do it every year thanks
They did in FY19 as well. I think it was planned ahead to lower and then lower again. I'm sure they're not beyond lowering it further in the near future though.
Its subsidised, not free.
OP you could always do the trick of going oversea's and living your life there to avoid the debt but not worth it staying away from this great country ,
I get that you’re commenting that it’s impossible to move and work overseas right now but important to note that that loophole ended a couple of years back if you earned enough in the foreign country.
All foreign countries?
Every 12 months you have to declare your income to the ATO so they can work out if you owed a debt based on your HECS. It probably doesn't matter if you never want to visit Australia agin but you can be stopped from leaving if you owe a debt or haven't made the required declarations, I believe.
I believe so, yes. It depends on how long you reside outside Australia and how much you earn.
As everyone has already mentioned, if you lose your job, you won't have to pay your HECS back and it doesn't accrue interest at all either, just inflation (well thats how it was a few years back, when I was paying my debt off). So no need to do anything at all it is not a debt that can cripple you due to the coronavirus causing you to lose your job.
There is no interest applied to HELP loans, however HELP debt is indexed annually according to the Consumer Price Index (CPI).
Yes, it's indexed every year, so you still have to pay more every year you leave it.
in absolute terms yes, relatively though it is exactly the same amount or actually a little less as CPI tends trail wages growth.
It could actually result in a sizable tax refund as well if your income drops to below the hecs threshhold.
Lower the repayment threshold.
Make the government a secured creditor on the HECS debtor's estate.
Make the government a secured creditor on the HECS debtor's estate.
This ! …. To many older folks studying for the hell of it with no intention of ever working, student until retirement type deal. A huge drain on Gov't resources.
That's why there's a HELP debt cap; I think it's just over $100K
Edit: $106 319 in 2020 for most students
That's why there's a HELP debt cap; I think it's just over $100K
That's still enough for 3-4 undergraduate degrees… all whilst scumming up on Austudy and the raft of associated gov't benefits.
All for zero net gain to society.
@stringbean402: Not sure why you've been negged, your point is valid.
Do you have stats by chance on how many 'late in lifers' study under HECS? Would be interesting to know.
@malich: i had a one or two in my class. I always thought how silly - just get the reading list! Come anyway (nobody kicked me out of a lecture theater).
Overwhelming was foreign students - used to get a visa (scam?).
Both should go.
It's worth noting that cap is pretty low, a basic bachelor and 2 year masters will get you up near the 100k mark.
Definitely can't be a student forever.
Old people have paid way more taxes than me or you. Let them do what they want you nonce.
A huge drain on Gov't resources.
Do you have a source on that?
If you want people to start spending then HECS would be amongst the last places, household debt in Australia is amongst the highest in the world and paying some of that down would probably encourage “stimulus” although if they go that far why wouldn’t they just give people a lump sum to spend at Harvey Norman.
OP; can you give us any examples that would help either individuals are the greater economy without having a negative effect?
If I access jobkeeper I don't pay HECS. When I work, a small amount comes out as HECS. I see no reason why I would use Super or expect it to be waived. I barely consider it a debt as I've gotten so use to it coming out of my pay.
Non citizens that have worked here for a few years or more may need to access super as they won't be eligible for jobkeeper or jobseeker.
If there is contraction in the economy, maybe HECS debts will be indexed for negative inflation!
im in two camps with HECS
1 - I believe University should be free (or at least for essential careers ie Nurses, Teachers etc - not Arts degrees)
2 - Everyone should have to pay there HECS back a large % dont because they dont earn over the threshold due to the 'large part time' nature of work these days once people have families.
So the solution is simple remove HECS let University be free but limit places to meet demand - ie we train x amount of teachers/Doctors/Nurses et al because that is was what we predict the demand to be and it also improves the overall stand of students due high competition for place but the Universities in this country are generally pretty poorly running just wanting $$$ which is the real issue over saturating the market with graduates ie Law graduates can take 2 years to get a 1st job
Of course we probably need to completely change the Atar Score because it is pretty garbage and is essentially a who has the most money, who can afford tutoring, private school fee slug feast opposed to a true test of an individuals abilities. It also neglects/puts down a lot of non-science based pathways, ie drama, It etc Which is strange because hard science in Australia generally leads no where unless you do a post graduate degree
So the solution is simple remove HECS let University be free but limit places to meet demand
I have just have just one problem with using a demand based model. We can't always predict the demand and sometimes poor demand modeling is used.
For example, the nbn. When the liberal party first came up with their vision for the nbn it was fully capable of meeting future demand. However, we are now in a situation where the nbn can't meet future demand in various cases.
Of course no system is perfect but I think it would be better then what we have now but I'm not expert it is just my opinion
When the
liberalLabor party first came up with their vision for the nbn it was fully capable of meeting future demand. However, we are now in a situation where the nbn can't meet future demand in various cases due to the change to the MTM (Multi Technology Mix) NBN that we have now from the Liberals.
Fixed it for you.
Thank you, I specifically worded it that way because in my opinion I have seen the worst of people come out during this crisis and I was trying not to get negative votes from people who are showing the worst of humanity during this crisis. Looks like it backfired…
@triviums: I don't really follow your reasoning.
The probably reason why you got negged is because you were incorrect in claiming it was the Liberal party that came up with the NBN. If you'd said something along the lines of what I said with correcting you, I don't see a reason why you would have been negged.
@Nousernamehere: I've been getting negged a lot by people who refuse to see an issue that has gotten worse due to the crisis as an issue. Most of the time it's because they are dehumanising the issue. Those who are dehumanising issues during this crisis are more likely to be conservative.
In recent history, Malcolm Turnbull has been one of the more popular PMs and typically people tend to take the same positions as someone who they support. Malcolm Turnbull recently put out a statement on social media saying that he supports the version of the nbn that he gave to Australia, even after people pointed out the major issues that were occurring due to COVID-19.
Consequently, I was trying to walk a fine line on the fence to not get negged again through pointing out another major issue that has come to light due to COVID-19.
incorrect in claiming it was the Liberal party that came up with the NBN.
Are you sure you want to attached the labor party to the NBN??
By doing so you allow the liberal party to blame everything on the labor party as they are the ones that came up with the NBN. Malcom Turnbull is already doing that. He blamed all the nbn issues on the labor party because they are the ones that came up with the NBN.
I wanted to make it crystal clear that the version of the NBN today is the liberal parties NBN and has almost nothing to do with the labor party. So I worded it as if the liberal party came up with the NBN since most of the issues with the NBN are coming from ideas they came up with.
This was my first attempt to say something "controversial" in a way that I thought would appease everyone. I did a terrible job and I won't be doing it again.
In recent history, Malcolm Turnbull has been one of the more popular PMs and typically people tend to take the same positions as someone who they support. Malcolm Turnbull recently put out a statement on social media saying that he supports the version of the nbn that he gave to Australia, even after people pointed out the major issues that were occurring due to COVID-19.
Well.. a lot of people are very simple creatures and just believe what they’re spoon fed through the MSM without looking outside their bubble and believing things that (for some reason) seem to be a common narrative - such as ‘the Liberals are superior economic managers’ when there’s no evidence of that.
Are you sure you want to attached the labor party to the NBN??
By doing so you allow the liberal party to blame everything on the labor party as they are the ones that came up with the NBN. Malcom Turnbull is already doing that. He blamed all the nbn issues on the labor party because they are the ones that came up with the NBN.
Of course, the original version of the NBN was a good example of long term planning, ‘build it once, build it right’.
The Liberals then came in with their whole ‘look at this massive Labor debt’ (even though they more than doubled the debt during their equivalent time in office and then COVID-19 has blown both of those out of the water), so went in with the typical 3 word slogan for simpletons to understand ‘sooner, faster, cheaper’ and a majority of the public lapped it up. What we are left with now is a network that basically transferred a small amount from CaPex between the respecting NBN rollouts to a massive (comparative) increase in OPex (but that’s easier to hide in the grand scheme of things) and a network which is substandard for the majority.
If the MSM actually did what they were meant to, that is, investigative journalism rather than rehashing press releases, the public may be slightly more informed. But that’s a losing battle anyway.
To cut a long story short, I’ll say it again, the only reason I see why you’re getting negged is due to the way your phrased what you had said. Reading it back I do get what you were meaning now but on first read (without the later context) it did seem that you were saying the entire NBN was the Liberals idea compared to actually being started by Labor (and then gutted by the Coalition).
NOTE TO PEOPLE WHO ARE DOWNVOTING ME AND UPVOTING PORTHOS:
poor demand modeling
I specially added those words in to try and stop you from downvoting me because I AGREE with you.
This crisis has brought out the worst in people and I was trying not to get downvoted by those people…
starting with this post? lol..
op wants the government to cancel the debt for education with taxpayers money? why do you borrow? hoping not to pay anything back, all those education taught you no morals. You should live on the dole, not spent those years in university and give your place to others.
engineering, mathematics, chemistry, physics free? what about law?
Of course but I dare say instead of having north of 1200+ graduates a year it should be dropped to maybe 40-50per state
ok wow a lot less uni spots in future. What would all the other students do?
@wordplay: Go on the dole, and we just pretend the government is saving money by only looking at education costs and ignoring welfare
You realise uni is subsidised by the government for all UG and in demand PG courses already
You do realise almost all out senior MPs got the Univeristy education free now use that education to get massive salaries once again paid by the tax payer
No I didn’t how did they get free education
Yeah but it still costs many thousands of dollars?
The benefit is not only to the student, but to Australia as a whole. People don't go to uni for the fun of it they go to contribute to the economy and the country.
Sounds like you want a free ride,
OP only put out options. The only segment of the population that got a free ride were the baby boomers.
Studying at a university was certainly free back then.
It was free for about 15 years from 1974 - 1989 (certainly beneficial for people at uni then). However before that there was no HECS (although there were scholarships) so it was a lot more for privileged people than it is now.
There were also fewer baby boomers at uni as a proportion of the population then there are now, even with free university education, so they proportionately benefited less.
But they still got a free ride on house prices ¯_(ツ)_/¯
maybe freeze interest on HECS during this time?
Also refund it on subjects that can cancelled or changed in a major way. My wife has a print making subject that has been changed to online only, but like she says how can you take a subject that needs 90% practical work and just make it online only?
There is no interest on HECS, just indexation applied once a year.
yep, my mistake. Indexing always seemed like interest, so I got it messed in my head.
Indexation and interest is basically the same shit, either call it interest or indexation. You would be paying extra on the top of your loan regardless.
No they're not. 5 years ago interest was around 5% while indexation was ~1.5%. And since indexation is only applied once a year you can hold off making any voluntary payments all year until 1st June (earning interest on the funds) then the amount you pay doesn't get indexed at all.
@ssquid: I'm not implying index=interest.
My point is, you would still be paying extra on the top of your original loan whether you put it in 'interest' basket or 'indexation basket. Government have the choice of either indexation or interest, they can't have both at the same time. So, you can either call the indexation either cheaper/expensive version of interest for HECS.
Remember that Australia's inflation target rate is 2%-3%. So if you don't count the 2-3% as a cost of borrowing, then I don't know what you call it.
Let's say: $70k gross income with 40k HECS (4% repayment)
=40k*0.04= $1,600 repayment
Now index the 40k
=40k*1.8% = $720 increase
Indexed debt = 40,720
Less repayment=$1,600
New debt after tax return = $38,400
Now: you paid $1600 of your loan but it only reduced your total debt by 880. So your cost of borrowing is $720. If you are unlucky enough to get a decent job, your debt will only go up until you find a decent paying job.
@No ONE: I count the real inflation figure as the cost of borrowing, not optimistic projections. It's funny that the 1.25% applied to my partner's HECS was less than the interest applied to our savings account.
Therefore there was no relative increase in the HECS, because that's the way inflation works
@No ONE: Ok. Now do the maths as if the $40k is a personal loan with compound interest. You'll soon see how much better off you are with indexation, and what the fundamental difference is.
@No ONE: You're paying extra on top of the original payment but that % increases is probably less than the amount you receive on a bank interest. Therefore it would make more economical sense to not pay it off intentionally and chuck that money into a savings account
@worrierwan: You are assuming everyone have 40k savings in their accounts or with no morgage.
When inflation rate (1.8%) is higher than interest rate (0.25%) then it is not economical.
You can invest that 40k in shares and get better returns, then why leave in bank. This is a different discussion.
The point here is not whether indexation is better than interest, but rather additional cost attached to original loan amount. There are individuals who are probably earning less than $50k. For them they will keep paying 1% of repayment, but in will never get paid in infinity and even HECS debt will be greater (assuming inflation rate averages ~2% for the life and income remains under $50k).
I'm not implying index=interest.
also
Indexation and interest is basically the same shit, either call it interest or indexation.
fail
they are not remotely the same thing.
Education should be free. Everyone should be entitled to it, just like access to healthcare should be free, just like policing is free, just like Just like army/defence is free, just like our politicians are free, just like weather forecasting is free.
It is a socialised service, not exactly free, because everyone pays for it. But free as in there's no extra charge.
Some services should be socialised, as everyone needs them at some time and there should not be a profit motive associated with it.
some services should be privatised as they benefit individuals more than others or people want them more such as "Holidays" these should be profit motivated.
And who pays for it if it’s free, who pays the lecturer and tutors wages
HECS is only paid after a certain income threshold (around $45,000) and it is a percentage that scales. if your income drops, you pay less or nothing. So I don't think this would be a huge issue.