HECS Advice- Moving Overseas- Pay off or Not

grads5 on 15/05/2023 - 14:17

Hi there fellow OzBargainer's

I hope you are all well. This is my first post in a very very long time…… Recently I have accepted a position overseas. We have sold our house for good profit and have been looking at options, specifically around paying off our only remaining debt (HECS). My wife and I have a HECS debt of around $90k, with the latest indexation increase to 7.1% it has driven me to get this HECS paid off so that we don't have any debt to worry about upon our return to Australia in a couple/few years.

There is an issue that I face, the settlement of our recently sold property is finalised 30th June (obviously after 1st June indexation date). Because I am still going to be indexed the inflated 7.1%, Is it still advised that I pay off my HECS debt …….. Even after June 1, 2023…… Or is it best to wait for a later date and continue to invest $$$ into HISA??? Any advice is greatly appreciated!

Financial HECS-HELP

Comments

  • Tech5 on 15/05/2023 - 14:38
    +1

    If it's after indexation, there is no harm in keeping the cash handy and pay it if/when you need to

  • Jaspa7 on 15/05/2023 - 14:43
    +2

    Entirely up to you and your finances, but I'd suggest paying off roughly half of what you can afford, other half into HISA so you can access it later

    • grads5 on 15/05/2023 - 19:54

      Yeah true and great advice. I think the play is to just pay it off to avoid doing a future Worldwide Tax Return etc. Its a shame I am 30 days outside of the cut off :( Appreciate the advice!

  • sagrules on 15/05/2023 - 15:05

    If your HISA earns you more than the 7.1% interest you will be charged then up to you how much you want to pay back.

  • Unorthodox on 15/05/2023 - 15:28

    I'd clear off what you can, the next few years will likely be indexed at a lower rate so you can try average it out and take the hit in the latter years.

  • freefall101 on 15/05/2023 - 15:32
    +1

    I might be worth paying it to avoid lodging a worldwide tax return each year, and if you're over the threshold on your global income you still need to make repayments.

    Granted, it's $90k less cash on hand just to avoid an hour's work once a year (you can lodge it online).

    • grads5 on 15/05/2023 - 19:53

      Hi there, I think it might just be the easiest option…..It's unfortunate that 30 days is the difference of 7.1% extra to be paid but oh well. We got a bit more for the house than expected so I guess it all evens out! Appreciate your advice!

  • legend30836 on 15/05/2023 - 15:41

    Use bridging finance to pay of your HECS?

    • grads5 on 15/05/2023 - 19:56

      I actually asked a friend of mine who currently works at a bank and she said the following:

      A credit card would be no good because you paying the HELP debt would be considered a cash advance, so that’s interest charged immediately at like 23%

      You cant really do ‘bridging’ in this scenario either.
      My only thoughts were to take out a home loan against your property now for the amount required to pay out the debt which would then clear with the sale.
      But

      1. You need to make sure you have enough equity available based on the bank valuation held.
      2. I don’t know if they will do new lending if there is already a contract on the property? But worth asking
      3. You will be paying like 5.5% interest on this new loan - very short term though
  • Caerdyddblue on 15/05/2023 - 16:20
    +1

    Can you get a 0% credit card and make a payment of HECS before June 1st then monthly repay the credit card?

    • grads5 on 15/05/2023 - 19:56

      Unfortunately it is considered as cash advance and therefore 23% roughly :(

      • BlueGlass on 18/05/2023 - 12:43

        Then do a balance transfer to another CC?

  • elgrande on 15/05/2023 - 22:24

    My wife and I have a HECS debt of around $90k

    Didn't know you could have a joint HECS debt..

    Must have been a double degree?

    • grads5 on 16/05/2023 - 07:47

      I have a double degree yes, my wife has a separate HECS debt, however for the purpose of this question I just combined them together, but they are actually separate accounts.

  • q9707418 on 16/05/2023 - 11:12

    What I did was about 15 years ago… but you may still be able to do it…
    I paid mine off with a credit card ~$10k at the time (and got a 10 or 15% dicount)
    Then I balanced transferred that to a second credit card at 0% for 6 months.
    Then I did my tax and got extra tax back as I was able to tick the box now that indicated I did not have a HECS debt (but extra had been taken out in my pay all financial year)
    Then I paid off the second card with my tax refund.

    Thinking you may be able to do something similar… but maybe not with 90k… maybe you could pay some like this…

  • sky42856 on 18/05/2023 - 11:31

    What about Citi credit cards - they offer PayAll function up to a limit of $20k per person? See the Financial section for those card details.

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