Thoughts on Tackling $155k HECS Debt

LNewtonFunk on 03/06/2022 - 12:21

Hi all,

My partner and I have recently recovered from the crazy that was COVID messing with all our plans financially.

I have my HECS mostly under control (should be done in 2 ish years), but she has a rather insane number to work with, and I am just looking to be pointed in the right direction for how we can further look into dealing with it.

Her HECS debt, after the recent 3.9% Indexation from a couple of days ago, is now sitting at a whopping $155k (numerous degrees, but all settled now and no more planned).

She makes roughly $79k gross base per year now that she has finished her degree and is working full-time. This may grow in the future, but would take a couple of years at a guess.

Totally understand that no one really comes after you for HECS so "don't worry about it". We get that.

We are planning to buy a house in the next year or so once a few other things in life settle into place for us.

So the worry has turned to how much this $155k debt will impact our loan capabilities. Not entirely sure how it works, but my understanding was if you got pre-approved for say $500k, you would actually be working with $345k due to the HECS debt. Is this right? I may be way off with that one.

The next order of business then, would be how does one even start to tackle a debt this large? And what are the smarts about trying to lower it? I don't believe her mandatory contributions that are paid towards HECS are going to even negate the effects of Indexation at the current rate if it stays that high.

Voluntary contributions are an idea, but they'd have to be quite substantial each year to again even start to combat the Indexation at the current rate.

Just wondering what others have done, or would suggest, in this situation? Is it perhaps just one of those things we just forget about because again, no one comes for you over a HECS debt?

Neither of us are currently into or very clued up on investing etc, so while I know EFTs and the like are often suggested as better returns on your money, it isn't currently something we know a lot about.

Appreciate any and all input.

Thanks!

Financial

Comments

  • offthetap on 03/06/2022 - 12:23
    +65

    155k? did she do like 6 degrees???

    • NewtonFunk on 03/06/2022 - 12:26
      +74

      3 Bachelors, and 1 Masters. 2 of those bachelor degrees are unrelated to anything she now works in.
      We really shouldn't let people take out giant loans fresh from high school in my opinion haha

      • DiscountForThee on 03/06/2022 - 12:32
        +32

        Were they bored and decided to fill their time with another bachelor? Or did their research into the job description / prospects not align with reality?

        • Serapis on 05/06/2022 - 01:46
          +1

          I know a guy like this though, career academic but really smart guy who loved the research aspect. He became a professor at Stanford a while back.

      • Donaldhump on 03/06/2022 - 12:58
        +4

        whats the degrees

        and why so many? you would 30 by time you could even work

      • [Deactivated] on 03/06/2022 - 13:23
        +19

        We shouldn’t, but people should also have the common sense to realise that it isn’t just a free degree.

      • orangetrain on 03/06/2022 - 14:07
        +11

        Good for her to educate herself. I don't have the patience or time to do all that due to wage slave machine.

      • USER DC on 03/06/2022 - 14:23
        +1

        If such was the case then Uni s wont be making big fat profits,
        Nor will those degrees be as expensive as right now.
        People would actually be able to get a degree without loan

      • SF3 on 03/06/2022 - 15:56
        +4

        3 Bachelors, and 1 Masters

        Sounds like more than 10 years of studies.

        You should just have a casual chat with a bank to see the impact of HECS on your repayment.

      • Hardlyworkin on 03/06/2022 - 21:58
        +39

        I knew a girls at uni who went through a few bachelors.

      • wei13 on 04/06/2022 - 08:54
        +6

        But she wasn't right out of uni when she took out her 2nd, 3rd, and 4th loans HECS loan

      • kallico on 04/06/2022 - 13:16
        +4

        Obviously she didn't do financial management

      • SlavOz on 04/06/2022 - 17:29
        +10

        Man she really fell for the biggest hoax of all time. At first I thought you were joking because her situation sounds like a typical set up for a discussion on education reform. I legit feel bad for her.

        $150k in debt from multiple degrees and only earning $79k…that's ridiculous. You can earn more than that without ever setting foot on a university campus.

        Options? You can take the American philosophy and advocate for student debts to be forgiven, but then you're just passing your problems onto someone else and also taking on other people's debts as well as your own. I hope you don't go down this route because it's extremely selfish to punish other people for your own poor decisions.

        Best strategy is to try raising her income. Even if she works outside of her field, she needs to earn more if you ever want a chance of paying off the loan and getting a mortgage.

        Good luck.

      • DonWilson on 05/06/2022 - 00:27

        She did all three bachelors and one master fresh out of highschool simultaneously? Impressive.

      • NatoTomato on 06/06/2022 - 12:37
        +15

        They aren't "giant" loans. You're not paying for the whole bachelors right out of high school, you're paying for the courses you enrol in. If you don't like them, swap.

        HECS is a very good system that really isn't that hard on the wallet. It pisses me off that people are starting to match the rhetoric from the U.S, when we are massively better off than them.

        Could there be an audit into the higher education system in Australia, to see how these institutions are spending the money (especially in the world of covid where everyone went online)? Yeah there should be, and I hope the greens use their new seats to attempt to push for something like this.

        Is it actually an issue worth prioritizing? No. As a middle class guy who's had a silver spoon in his mouth his whole life, I don't think the government should be putting any extra money in our hands, versus environmental issues, homeless issues, health, shit like that. We don't need it. She took the loan, now pay it up at a 5% of her salary annual rate, with indexing over the past 5 years being at > 2%. It's a solid deal, bring on the negs.

        This is a dumb af middle / upper class millennial/zoomer complaining masterclass (said as a zoomer).

        • darkmattersunB6c0MV on 06/06/2022 - 18:36
          +3

          Agree. Take ownership and try to pay off the loan without complaining. Get a higher paying job, get outside of your comfort zone, buy a house you can afford and upgrade when you can. All the best.

        • juki on 06/06/2022 - 22:06
          +2

          as someone from overseas, yep, a lot of aussies have no idea of the paradise they live in, and if they dont play nice they are going to end up like the rest of the world. Even as a foreigner paying higher rates through the rear end it is better than elsewhere

        • beet on 09/06/2022 - 20:28

          Don't wait for the government to force an audit. You (anyone) can voice their opinions on what needs to be audited to your relevant state Auditor General's Office.

          However, the financial statements of universities are audited annually by the Auditor General's Office.

      • ForkSnorter on 13/06/2022 - 08:11

        Why on earth 3 bachelors? I didn't know the government provided financial support for additional undergrad degrees (other than simultaneous dual degrees). She should have continued from her masters straight into a PhD instead. I understand that PhDs are completely free and she would have incurred no HECS debt at all for a PhD degree. Please correct me if I'm wrong.

  • stirlo on 03/06/2022 - 12:26
    +67

    So the worry has turned to how much this $155k debt will impact our loan capabilities. Not entirely sure how it works, but my understanding was if you got pre-approved for say $500k, you would actually be working with $345k due to the HECS debt. Is this right? I may be way off with that one.

    You are wrong and this whole statement is wrong (which is a good thing for you). The amount of HECS debt has no impact on what you can borrow.

    The presence of any HECS debt will however reduce how much you can borrow (though not as much as you think). HECS is paid through an extra tax on income (compulsory repayment) which simply reduces you disposable income between 5-10% depending on how much you earn.

    At $79k income you're paying around 5% HECS repayment so the bank will just take 5% off your income and use that salary to calculate how much you can borrow. In your case its like $4000 which at 6% interest rate banks assess at reduces who much you can borrow by around $65,000.

    • NewtonFunk on 03/06/2022 - 12:30
      +6

      That is VERY good news.

      She currently pays about $150 extra tax per fortnight due to her HECS debt. So if I understand what you are saying correctly, the bank/loan provider would generally just factor that $150 a fortnight amount into your income (which is your actual income amount anyway due to this debt) when they are calculating what they would offer to loan you?

      Is that about right?

      • stirlo on 03/06/2022 - 12:32
        +11

        Yes, bank will take the $150 a fortnight off her income and calculate how much can be borrowed with the lower salary (which as you point out is actually what she takes home currently anyway).

      • JuryWheel on 05/06/2022 - 08:54

        So only 37 plus years to pay it back then…

        • zorodluffy on 05/06/2022 - 16:27
          +3

          if CPI stays at 2.5% on average, she will never pay it off.

          if it shoots up next couple of years, she may owe more by the time shes dead

    • boomramada on 03/06/2022 - 13:37

      You are wrong and this whole statement is wrong (which is a good thing for you). The amount of HECS debt has no impact on what you can borrow.

      HECS debt has a impact on how much more you can borrow, reference CBA

      Example,
      Person with HECS take home amount is less than person without. Hence, person without HECS can borrow more, more take home pay.

      • stirlo on 03/06/2022 - 13:40
        +23

        The amount has no impact. Only the presence of one (which triggers compulsory repayments) which reduces your income available to service a loan

        • boomramada on 03/06/2022 - 13:45
          +1

          I only had like 2k left in my HECS, probably year to go, without HECS, bank lend me like 100k more.

          • stirlo on 03/06/2022 - 13:49
            +20

            @boomramada: Yes, it's the presence of HECS not the balance that reduces borrowing capacity.

            The repayments are 5-10% of income regardless of the balance. So having $2k of debt or $150k is treated exactly the same.

            Once the debt is paid off they will calculate your borrowing power with your full income rather than after repayments are taken out. That's where the $100k difference comes from.

            • boomramada on 03/06/2022 - 13:53
              +2

              @stirlo: well that's explained it then :)

            • johndoh89 on 04/06/2022 - 21:09

              @stirlo: Yeah I'm pretty sure the mortgage stuff I did only had a hecs yes/no and never asked the amount.

              But I wiped mine off before applying so wouldn't have been asked regardless after the answer was no.

    • duchy on 04/06/2022 - 20:20
      +4

      You know your stuff, mate. Thumbs up!

    • Edobear on 05/06/2022 - 16:07
      +21

      Mortgage broker here.

      HECS CAN have an impact on how much you can borrow but not always.
      Some banks will take the amount owing as part as your liabilities. This will then feed into their calculations for DTI (debt to income) ratio.
      Most banks have a DTI restriction with some starting at 6 (i.e. maximum debt of 6 times your income).
      In this scenario this would most likely reduce your borrowing capacity.

      So to understand this, we must first look at how a bank does their calculation for borrowing capacity.
      Essentially it all boils down to income versus expenses.
      Each bank will have their own calculation and policy with regards to how much income can be used.
      The net income after tax remains then feeds into their calculator minus any other liabilities and living expenses. (Living expense minimums do differ from bank to bank).
      The remaining funds or surplus income remaining can then be used for the banks repayments on a loan.
      They can also have a different floor (minimum) rates which is used to buffer repayments on the loan.

      So to give an example of the above.
      Income for single person is $80,000p/a
      Using https://paycalculator.com.au/
      Monthly take home pay $4,825 (after tax and HECS)
      Minus liabilities, lets say a $5,000 credit card limit. $200p/m (again each bank can differ on this)
      Minus declared living expenses or minimum, which ever is higher. Example - declared = $1500 but bank minimum $1700. Then they will use $1700
      This gives us $2,925p/m in net surplus remaining.
      We then calculate the buffered repayments on a loan (2.5% on top of the rate or the floor rate, whichever is higher).
      Lets say the floor rate is 5.75% and the actual rate is 3%. (3 + 2.5 = 5.5 which is lower than the floor rate, so the bank will use the floor rate)
      $500,000 loan @ 5.75% rate gives a monthly repayment of approx. $2,918 which leaves you a surplus of $7p/m.
      Thus your borrowing capacity would be $500,000.
      If looking at just this, the debt to income ratio would be $505,000/$80,000 which is 6.31 - acceptable to most banks.
      Now if we add in the HECS debt of $155,000 we now get $660,000/$80,000 which is a DTI of 8.25 - unacceptable by many banks
      If the banks maximum DTI is 7, then $80,000 x 7 = $560,000
      Minus $155,000 HECS and $5,000 credit card
      Leaving $400,000 for the loan to give us the maximum of 7 DTI

      I made this post only for theoretical purposes and to ensure there is no misinformation.
      Please see your licensed mortgage broker, financial advisor and/or tax accountant for advice.

      TLDR; Please see a broker or bank to work out your borrowing capacity. Too many variables and misinformation on the internet.

  • Quantumcat on 03/06/2022 - 12:27
    +3

    Not entirely sure how it works, but my understanding was if you got pre-approved for say $500k, you would actually be working with $345k due to the HECS debt. Is this right? I may be way off with that one.

    My understanding is they just take it off your monthly spendable money. Eg if you have to pay $200/month to your HECs debt based on your salary then you'll have $200/month less to spend on your mortgage

  • DemocracyManifest on 03/06/2022 - 12:30
    +3

    It’s just a factor in your expenses: so whatever is coming out of your salary for example or a compulsory repayment for the year in question is assessed. It’s not a credit card debt etc

    • stirlo on 03/06/2022 - 12:40
      +12

      You clearly have no idea how it works. The HECS balance is irrelevant to getting a loan. All they care about is serviceability which is calculated from after tax income, nothing to do with the HECS balance.

      • Jason Genova on 03/06/2022 - 12:42
        -3

        i wasnt talking about his ability to get a loan, moreso alluding to the fact that he's taking on so much debt, thanks for the neg tho

        • stirlo on 03/06/2022 - 12:44
          -1

          Meh, what's done is done, and HECS debt is still essentially free money. Maybe it wasn't a great way to spend money when they were younger but $155k is peanuts once you start earning a good wage and looking at buying a house.

          • Drakesy on 03/06/2022 - 12:47
            +5

            @stirlo: It's not peanuts though when you're trying to get a deposit and have it hanging over your head accruing at $7500 a year ;)

            • stirlo on 03/06/2022 - 12:50
              +6

              @Drakesy: That's just inflation though.

              If you held onto $150k of Eneloops you could expect their value to grow by $7500 as well.

              At the end of the day it takes 5%-10% of your income until its gone. Yes it sucks, but it's not like the amount cripples you financially.

          • BluebirdV on 05/06/2022 - 06:19

            @stirlo: If $155k is peanuts to you then you have had a very privileged life.

            • stirlo on 05/06/2022 - 10:24

              @BluebirdV: If your mortgage on your first home is $1 million, $155k isn't a big deal. Add in it's for university education which will give a higher earning potential (OP said their partner is working in a medical field) and it's probably 1-2 years salary.

    • NewtonFunk on 03/06/2022 - 12:42
      +10

      Well mine will be gone in about 2 years, and as I now know hers really won't muck with loan power too much anyway.
      We earn quite well between us with no other debts collectively, apart from HECS.
      So yes, 155k HECS debt, and a potential mortgage in the future.
      Thanks for your valuable input, Champ.

      • Pelicannn on 03/06/2022 - 12:50
        +11

        Thanks for your valuable input, Champ

        +1 for savage.

    • Brodo Faggins on 03/06/2022 - 13:40
      +1

      Nothing against OP.

      Can we just confirm:

      • Banks assess people's serviceability to repay any loans (CC or HL etc) & also how much income/liabilities they have.
      • However, education departments don't even bat an eye on how much debt they have / how much more debt they want to go into.
      • Therefore, education system = Rort.
      • Juice-Wa on 06/06/2022 - 16:27

        education system = Rort

        Setting aside OPs scenario. 1: People know they are going into student debts when they enroll, they know how much it is going to cost.
        2: Compulsory repayments don't care how much you are indebted and have minimal impact on livability (unlike mortgages)
        3: Your narrow minded view that HECS should operate it's student loans on the financial model set by banks means that education is only available to the financially able
        4: The problem is the attitude that students think they can study and try different things with little consequence because no one cares if they die with a HECS debt

        So no the student loan aspect to education is not a rort, people have poor attitudes towards education and a lack of respect for how lucky we are to have the HECS system.

        • rektrading on 06/06/2022 - 16:35

          Higher education exists to make money.

          They don't deserve any respect and should be treated like any other government-subsided industry.

          • Brodo Faggins on 06/06/2022 - 21:25
            +1

            @rektrading: ^I'm with rekt. That's exactly what I'm getting at.

            @Juice:
            1) I agree, but that's the thing - people lack financial literacy. Also HECS is deducted from income, but not a debt to be paid asap like a CC or HL. So like OP's situation, one can rack up many degrees without the need for "paying" for them right away. There are threads in OzB of "graving the HECS debt".

            2) Again, I agree but why is this the case? Is HECS not a debt? Why is there a uni fee in the first place then, if not paid like other forms of debt? Why can't I purchase a brand new car, and have the financing come off my income later when it increases, rather than fortnightly? Because the system itself is a rort.

            3) Boomers had free uni education. By the time they graduated and applied themselves, laws were implemented to rort the middle class with insane uni fees. I'm not saying it has to follow the banking system, but why is HECS the only debt, not properly executed as a debt? But more rather like a BNPL type scheme? Should it not be calculated into your borrowing capacity, since you'll eventually have to pay for it (or grave it) anyway? Not thinking outside the box is narrow minded.

            4) Again, agreed. But I do not blame the students who are funnelled since HSC, into making a "life decision" or a "career choice" at the young age of 18. There's people in their 40's and 50's making complete career changes and life changes. How is anyone expected to know little Timmy should do Accounting and stick with it for the rest of his life?

            Why can't we have 1 year free uni like some of the other countries, to see if that degree (or uni studies as a whole) is suited to the individual, before there is a fee attached? Why not just scrap the whole thing and make it free like the Boomers had it? If you want to do extra like Honours or Masters, or need to be a doctor or do your CPA, then fine have the fee for those. But a fee for a Bachelor's of Arts?

            That's why the education system in place is a rort. And guess who profits from the fees… It's a rort.

            • Juice-Wa on 07/06/2022 - 09:03
              -1

              @Brodo Faggins: If the financial penalties and blockades you are suggesting are implemented I never would have been able to start and finish my BEng degree. I agree that there should be penalties for those who chop and change and study in industries which do not provide substantial earning potential. Problem being is that it has the potential to influence the accessibility of education. Not all of use have parents who are financially stable enough to support their child through university. So for the sake of my career I am extremely grateful for the HECS system. So when I see people abusing the system by using education to "try things" or pursue extended education where they probably wont be paying back their debt within their lifetime (including my own sister-in-law who is studying a HECS funded masters in the fine arts), I see the biggest parasites in our society with even greater impact than an equivalent number of dole bludgers.

              Boomers have different attitudes in the workplace to us as millennial's and gen z's. People may be changing their vocation in their 40s and 50s but they are not changing employers or careers every 2-5 years like majority of us are. You shouldn't have to stick with the same career for the rest of your life but at least long enough beyond considering it a trial phase. So no you cannot make education free because resources will be abused and there will be an increase on the number of student benefit recipients, unlike boomers who actually took their education seriously to further their career. There are census dates which students can use to see if they like a degree, you can unenroll without financial penalty for up to 6 weeks into the course.

              I don't think they could ever take away the pension. Because in 30 years, after most people have pursued what brings them joy and happiness over the stability of their future they will be left with minimal retirement funds. I'll bet by then the pension will be based on a persons super, so those of us who have worked hard through their life to build careers and financial stability will continue to give a free ride to those who do whatever they want.

              • Brodo Faggins on 08/06/2022 - 01:21

                @Juice-Wa:

                If the financial penalties and blockades

                Let me stop you right there. Why is there a fee in the 1st place? Boomers once had it for free, can't the rest of the generations not have it for free?

                I agree that there should be penalties for those who chop and change

                No that's not what I'm saying at all. I'm saying how is a teenager supposed to know wtf they want to do at that age? Even if someone is 50, sometimes they don't know what to do either. And there's a $30k-$150k penalty for making the wrong decision?

                Problem being… accessibility of education

                Make it free then.

                people abusing the system by using education to "try things"

                How is it abusing the education system? What if I was forced to do Accounting by the environment & society shoving it down my throat, but all I wanted to do was be a vet?

                they probably wont be paying back their debt within their lifetime… equivalent number of dole bludgers.

                I agree. The question is not about the "people" and their choices. It's about the fee.

                People may be changing their vocation in their 40s and 50s but they are not changing employers or careers every 2-5 years like majority of us are. You shouldn't have to stick with the same career for the rest of your life

                You're contradicting yourself and agreeing with me here lol. Exactly the reason it should be free. But it's not. It's a rort instead.

                unlike boomers who actually took their education seriously

                Are you saying everyone outside Boomers isn't taking it seriously? What

                Back to my initial point - The current education system = rort.
                The guy upstairs only cares about bringing in $5-6 figures in, per student. Financially, who actually profits, and who actually suffers?

                • Juice-Wa on 09/06/2022 - 11:15
                  -1

                  @Brodo Faggins:

                  Boomers once had it for free, can't the rest of the generations not have it for free?

                  Because boomers might change careers at 40-50 but current generations through the education system have tended to change far more regularly. Your who response hinges on the belief that if you are bored of your job or couldn't be bothered completing a degree the government should foot the bill for your instability. It's like you either haven't gone through the higher education system or you just enjoy the thought of free loading the education system and AusStudy without consequence. I'm not being contradictory but rather arguing that your ridiculous scenario means it doesn't matter if you change your mind 8 times within 4 years (because that's what people are doing), education should still be free because the boomers got it doesn't cut the mustard when because they had lower drop out rates and longer careers. Not to say they have to stay in a career for a lifetime but they actually valued their education. If you don't like it you can drop out before census date, there's your free education.

                  What if I was forced to do Accounting by the environment & society shoving it down my throat, but all I wanted to do was be a vet?

                  If you're forced to do accounting then you probably don't have the aptitude to be a vet. If you really wanted to do veterinary science you'd enroll in a bridging course. But you would probably drop out because the thought of playing with animals as a career probably won't outweigh the effort required. Otherwise you would have put in the effort through highschool for others to see you have the ability to complete a veterinary course. But if you've had to pay extra fees to take a bridging route for your veterinary degree it would be worth it because you get to work in your dream career.

                  If you're two or three degrees deep without a job that requires any of your education (unless you're studying MD or something), then sorry but you're just a freeloader. From the sample size of my high school graduating class, I know more of those freeloaders than I do people with careers build on their higher education. So get lost with your "education should be free" nonsense. If it was to be made free it should only be made free for those who complete their studies and are working in that field for a minimum period. As if I want my tax to be wasted on courses with 25% graduation rate (which is what my held degree BEng is) or one with less than 50% employment rate (sports science students who go work at gyms with their cert 4 coworkers). Don't cry about having to invest in your career, be responsible and grow up.

  • Drakesy on 03/06/2022 - 12:45
    +7

    Geezus imagine having $155k hanging over your head for the rest of your life and not even earning huge money.

    In America thats understandable but in Australia that's ridiculous.
    I guess this is the problem with HECS, people treat it as fake money as they don't ever really see themselves paying it off, it just comes out progressively.

    If she doesn't pay it off it'll inevitably come out of the estate.

    Still it beggars belief that someone will happily get into that much debt, with indexation tipped to go to 5% next year thats another $7500 (before paying off the balance).
    I'd personally kill it asap but many on OZBargain would rather let it sit there.
    With a recession on the way, ETF's are likely to go nowhere (after tax you'll be pretty much even, during recessions you look at paying down debt, it's not a time to play with stocks).

    Must not have done a financial/commerce degree.

    • NewtonFunk on 03/06/2022 - 12:48
      +10

      She is starting out in a medical field, which she is loving. They are crazy expensive degrees. In future her income should improve, but we can't know that until it actually happens. Work with what the situation is now etc.

      She feels not great about it, hence me making this post trying to understand what we can do about it, and what it actually impacts in the future.

      They deduct the remaining HECS amount from your estate if you pass? Interesting, will have to look into that as well.

      • jorf on 03/06/2022 - 12:49
        +10

        No - the debt is cleared if you die.

        • Drakesy on 03/06/2022 - 13:00
          +4

          I personally wouldn't want a hecs debt accruing at 5%, outstripping my minimum repayment and ballooning out to 200/300% of its value by the time i die.
          And the government at any time can change this to being able to go after your estate, its been discussed before.

          As for the medical field,

          If its a doctor she's fine, if its a nurse/biomed scientist it's not so fine.

          Whats her future earnings potential?

          • NewtonFunk on 03/06/2022 - 13:17
            +4

            @Drakesy: That link specifies paying any outstanding tax returns, including HECS payments for those periods. Beyond that amount though, it is written off. Says it in the last dot point.

            This site actually lists out most of what I was trying to understand, so thanks for sharing it.

            She is an OT. Not sure I've correctly titled that when I say medical field to be honest? Allied Health might be more accurate. She is passionate about it, and the future earnings potential is pretty good from what I understand.

            It's sounding like a case of tackle the loan when earnings mature.

            I totally hear your argument for not wanting the debt accruing faster than the minimum repayment. Definitely don't want that either. But not a lot to be done about it just yet.

            • Drakesy on 03/06/2022 - 13:26
              +5

              @NewtonFunk: Ok, fair enough, OT's have a fairly good earning potential, $120k+ so in a few years time she'll easily be paying it off.

        • Sensiekatie on 04/06/2022 - 13:08

          I don't know if it is still the same. However when I had mine, our accountant said it was good I was a woman and not to worry too much about it. They didn't take it out of an estate for women with a family. I'm not sure if that implies that they do for men.

          Certainly I would find out.

      • Quantumcat on 03/06/2022 - 14:21
        +5

        She feels not great about it

        She is making me feel better though! I think mine is like $50k but I am too scared to look

  • Pelicannn on 03/06/2022 - 12:48
    +16

    A lot of my friends always tell me things along the line of 'you're lucky you've always known what you wanted to do since you were little'.

    Now I understand why… Can't imagine finishing a degree, going to work at a place with said degree and realise I hate it, only to do another degree and rinse and repeat until I found a job I liked. Next minute you're 150k in the shitter with the Government just to be happy in your career, and making only half that annually in return.

    I love my job, and I am happy it came with zero HECS debt. (Instead I get to trade 15 years of my life in return). My dad got free university education, but I guess that was a long time ago.

    • stirlo on 03/06/2022 - 12:52

      (Instead I get to trade 15 years of my life in return)

      O_o What kind of work do you do?

      • Pelicannn on 03/06/2022 - 12:54
        +2

        RAAF Pilot

        • stirlo on 03/06/2022 - 12:55
          +3

          Worth it :)

        • Drakesy on 03/06/2022 - 13:06
          +2

          Congrats, it was a good choice, paid to study then paid to jump in a plane.

          But yeah i guess the government invests a few million into a fighter pilot so they'd like a return on investment before they bail to commercial. Unfortunately they do get to dictate your postings as well. Agree that 150k in the shitter is not a great call.

          Went down the pilot selection before the recruitment bureaucracy lost me in the system, classic Defense.

          • Pelicannn on 03/06/2022 - 13:44
            +6

            @Drakesy: I'm not a FJ pilot (too average at my job for that haha). I flew transport and now I am a Flying Instructor.

            Correct - I do have a degree, and the pilot training I have recieved is worth millions of taxpayer dollars thats for sure, so you are right - hence the 15 years.

            I haven't seen official numbers recently, but in the mid 2000's the cost to train a single person from Ab initio to qualified F/A-18A/B driver was in the vicinity of $15 million. I can only imagine with the new PC-21 training platform and F-35 that number has gone skyward.

            Went down the pilot selection before the recruitment bureaucracy lost me in the system, classic Defense.

            Unfortunately DFR is where a lot of people get let down. A lot of people don't understand but they are a private contracted business by the Government to recruit, and they are paid more to recruit people into certain jobs. Meaning that if you rocked up wanting to be an Air Traffic Controller or Pilot, but they really need to fill Air Battle Management roles, they might sway you that way because at the end of the day they will get more money for recruiting you in that position.

            • Drakesy on 03/06/2022 - 13:47

              @Pelicannn:

              mid 2000's the cost to train a single person from Ab initio to qualified F/A-18A/B driver was in the vicinity of $15 million. I can only imagine with the new PC-21 training platform and F-35 that number has gone skyward.

              Yeah would be pretty prohibitive
              I guess the trend towards drones is a no brainer then.
              Get to fly them remotely and you're not putting your asset in harms way.

              • Pelicannn on 03/06/2022 - 13:50

                @Drakesy: Yeah, not sure if you have seen the new Ghost Bat (there was a bit of a laughing stock over the name) but that is probably where we will be heading, though I think not for another 30+ years.

            • rektrading on 03/06/2022 - 13:56
              -5

              @Pelicannn: $15M to train a war machine operator or 15 hr free learning to mint art and make a 12Y child into a millionaire in 1Y?

            • matt-ozb on 05/06/2022 - 02:50
              -3

              @Pelicannn: Are you sure you're complying with defence security requirements by sharing your job in a public forum? Probably breaching your NV2 or PV.

              • skullster704 on 05/06/2022 - 11:56
                +1

                @matt-ozb: Are you sure that Defence Social Media policy allows you to ask that question?

              • Pelicannn on 05/06/2022 - 12:28
                +5

                @matt-ozb: Mate, I’ve been on the radio, YouTube, Channel 7, Channel 10 and even had a 10 minute segment on Totally Wild as a Day in the life of a RAAF pilot…

                So yes… I can share my job information. I’m not here handing out national secrets…

                Also, if you’ve actually read the Defence Social Media Policy, you’d be aware I haven’t posted anything that is:

                offensive towards any group or person based on any personal traits, attributes, beliefs or practices that exploit, objectify or are derogatory of gender, ethnicity or religion.

                Not have I transmitted any information that is considered Official Information without prior approval. If you want my salary, google ADF Payscales. That is public knowledge just like every other Government Salary.

        • cevad on 05/06/2022 - 09:36

          Avatar checks out - Roulettes?

          • Pelicannn on 05/06/2022 - 12:29
            +1

            @cevad: No, Flying Instructor at 2FTS, but same aircraft.

            I’d need another 15 years practice to be a Roulette haha!

      • Donaldhump on 03/06/2022 - 12:57

        I'm a gigalo

        • Pelicannn on 03/06/2022 - 12:58
          +7

          $20 is $20

    • bakemon0 on 05/06/2022 - 10:17

      if you don't mind me asking
      1. how much do you make
      2. have you seen the new top gun movie and do you like it?

      • Pelicannn on 05/06/2022 - 12:26
        +12

        We are paid based on our rank and years of service more so than the fact we are pilots. All aviation spec are on the same sort of pay system, whether that is Fast Jet, Fixed Wing (pilots other than FJ), Weapon Systems Officers (Air Combat Officer in back seat of a Super or Wedgetail etc), Air Traffic Controller etc.

        My base salary is approx $149,500. That will go up every year around $8-10,000. Until I cap out at about $175k in the next 3 years. To go any higher I’d need to promote to SQNLDR which I have little interest in doing right now.

        On top of the base salary, I obviously don’t pay for medical and dental, or pharmaceuticals and have no limit on paid sick leave (as long as it’s genuine of course), any required surgery or medical treatment is funded even if it occurs outside of work. I had the displeasure of being hit by a drunk driver about 7 years ago and all surgery and rehab was fully paid for, as well as nearly 12 weeks on sick leave.

        I also get subsidised rent and the home I own (back in Brisbane) has subsidised payments from DHOAS which is about $5,000 a year into my home loan.

        Free gym, pool and running track on almost every base so no need for a gym membership.

        Then there is very generous Super. I’m lucky to be on MSBS which is amazing but even the newer scheme is still not bad at 16% I believe.

        I also have access to excellent salary sacrificing arrangements with almost no caps.

        So all in all, I’m paid fairly well. That being said, for the exclusivity of my job, the hoops and difficulty of the training I had to jump through (we lost a third of the pilots we started with when I went through training and that was a group of 32 for our year who were reduced from thousands of applicants), it probably leads you to know you have to really want this job. Pilots course was hard, definitely the hardest things I’d ever done and I’m comparison school for me was mostly a breeze. Most of the people in this job graduated top of their class in High School and probably could have done anything else such as medicine, law or actuarial studies. It’s not a career you go down to be filthy rich, but well off is certainly achievable. Besides, I can guarantee my job satisfaction is a lot higher than most. Nothing more rewarding than going flying every day and teaching someone in the pursuit of their dreams.

        When people hit the salary cap as a FLTLT they usually take one of a few paths - promote, take a specialist role (both lead to a further pay rise) or leave for the airlines / UAE / Saudi / something different to flying.

        As for the movie… I saw it, I was impressed. I’m not a FJ pilot as I’ve said, but it was exciting to watch and the story line was actually surprisingly good. I think it was better than the original tbh.

        • bakemon0 on 05/06/2022 - 21:12
          +1

          thank you for the detailed reply, it was very insightful as I don't know much about that field of work

    • whatgift on 06/06/2022 - 16:10

      I always thought I would be a classroom teacher, and did a degree as such. Found I didn't like it, but ended up teaching outdoor recreation instead, which still required my degree, so not a complete waste!

  • Stopback on 03/06/2022 - 13:04
    +8

    You should earn more in investments than interest in hecs. Don't bother with the debt. Focus on investing and paying it off or not at a later date

    • Drakesy on 03/06/2022 - 13:09

      There's very few investments at the moment that are doing better than inflation, even super this year has gone backwards after inflation.

      • rektrading on 03/06/2022 - 13:20
        +3

        The best time to accumulate pristine hard assets is after a significant damp like now.

      • donga100 on 03/06/2022 - 18:32
        +4

        If you voluntarily contribute to super you effectively get a 25.93% return on investment instantly. This is because voluntary contributions are only taxed at 15% as opposed to the 32.5% income tax that someone on $79k is paying. It is currently capped at $27,500 per year and comes with the obvious downside of not being able to access it until you retire but if you are looking for long term investment/wealth creation there is not much better in terms of risk/reward.

        • Drakesy on 03/06/2022 - 18:38
          +3

          Ok voluntary contributions yes,
          Also to lock away and utilise for the government superannuation housing scheme

      • Scantu on 06/06/2022 - 21:46
        +1

        Doesn't matter. Unless your thesis is no investment will never outperform CPI (what…) investing is mathematically a no brainer.

  • rektrading on 03/06/2022 - 13:05
    +1

    OP, can your partner start a private practice, an LLC or Pty Ltd?

    • NewtonFunk on 03/06/2022 - 13:06
      +6

      She has only started working in her field Jan this year. So in the future, absolutely, but not for the next few years I wouldn't think.
      I get where you're headed with this though. Good idea.

Login or Join to leave a comment
Login Join