As per title, here is seven more words to post
Anyone Else Scurrying to Pay off Their HECS Debts by The End of This Month to avoid 7.1% indexation?
Jaspa7 on 15/05/2023 - 14:22
Poll Options
- 37No, better places to put money (comment on what beats 7.1% in one month)
- 191No, don't have any extra money laying around
- 19Yes, will be paying off < 30%
- 12Yes, will be paying off ~ 60%
- 196Yes, will be paying off all of it!
Comments
Yes beem it bpay using a credit card, that's what I'm doing but it's a 2k max bpay limit per day. Earned points on it too.
The $2k limit isn't daily, it's just per transaction. You can just split up any amount over $2k into smaller amounts below $2k and pay off on the same day.
Hey mate,
Out of curiosity which credit card did you use?
I’m planning to pay via beem CC to earn points too!
ThanksVirgin money flyer but most should I'd think
I just signed up to Beem but it returns an internal server error when trying my CC. Even tried to re-add but not luck. :(
i had some issues yesterday.. try a different number like $11 or something
I had the same issue and reached out to Beem.
I did eventually get it to work so keep trying mate!
Doesn't Sniip charge fees?
Yep, minimum on a credit card is 1.29% for AMEX and more for Visa/MC. Considering most rewards programs give you 0.5 - 1% value max, stuff like sniip is generally a scam I'd say.
I have over 50k and if my math is correct, it will take me about 30 years to pay it off.
Feels pointless to even think about and just accept that the government will garnish ~$200 of my wage every fortnight.
what career line have you chosen than resulted in a 50k hecs debt, yet potential future career growth and earnings that would result in a salary low enough that it would take 30 years to pay off?
:/Teaching is one
4 years minimum ~40k, undergrad+masters ~50k. Average salary of around 90-95k if looking at 30 years.
The career line of having mental health and other issues (profanity) with Uni. I basically did uni twice to finish my degree.
I guess clearing one thing up, sure it's your wage but it's their money. You borrowed from other tax payers for your education.
as opposed to the boomers that did it for free right?
University was only really free between 1974 and 1989, Late Boomers and early Gen X who attended University would of benefited from this scheme.
However the time in which it was free was a tiny blip in Australian history and just because one generation got something for free doesn't entitle every other generation something for free either. Especially considering university is already discounted for Australian Residents.
Do you think people who choose not go down the university pathway should get a helping hand as well like a greater tax break or cash bonus in pay. It would only be fair as they are of an equivalent burden on the tax system.
30 years to pay off a $50k HECS debt… are you only working part time?
No I'm gonna take that debt with me to the grave….
it will come back zombified and passed onto estate ?
I've been stressing about this for months and finally bit the bullet tonight and paid off half my $40k loan and my parents were generous enough to chip in the other half (to be paid back at a later date). If you can afford it, or are able to get a friend/family interest free loan do it. I am very lucky to have parents who have this kind of cash but it just means in the long term I'm not adding excessive interest to my loan and paying more overall.
The other thing to consider is concessional contribution to super vs paying off HECS. This will come down to your marginal rate of tax, keeping in mind whilst inflation is 7% for 2023 it is likely to return to 2-3% in the next 5 years as a historical baseline. You would likely see returns on global equities more than this if you put it in super.
If you are looking to buy a home and need a mortgage paying off HECS becomes a no brainer as it significantly affects your borrowing capacity
Can I do a lump sum payment now and get the tax break for super or is it too late?
not too late, they recommend at least 1 month prior but I've made payments within 3 business days and it still went through (although probably not advisable)
I see, I've actually never done it before, do I do it through my employer or my super account?
@helpme: your super fund will have instructions on how to make payments, you will need to lodge an intention to claim deduction form after this to ensure it's picked up when you do your tax
If you are looking to buy a home and need a mortgage paying off HECS becomes a no brainer as it significantly affects your borrowing capacity
Not sure about that. Supposedly, paying off my ~50k HECS debt would let me borrow ~50k more. Taking it out of the 'deposit fund' also increases the chances of having to pay LMI. On that basis alone I'd be no more or better off. However, given that over the next 10 years the borrowed funds are likely to be subject to an average interest rate that is higher than the average inflation rate, I'd probably be better off keeping it for the house deposit.
This will vary according to your income and hecs balance and size of loan. At over 100k you are looking at over 10% of your gross income going to HECs so you'd be best off speaking to a broker to run some numbers. I'd say there's very few scenarios where paying LMI is worth it, there's also a long list of professional jobs that exempts you from paying same
I had about 6k left on my hecs since July last year. I think it should be paid off by now, is there a way to check? When I login to ato website it doesn't seem to be updated.
You'd have to talk to your employer to see what contributions they've been making.
Otherwise you can also calculate it yourself based on your salary.
I think any contributions that your work has been making are only applied once you submit your tax return which is always after indexation.
So you'd be better off paying off the 6k and then earning back whatever contributions have been made come tax time.
This!
WOW that would suck to find out later!!!!
Paid mine off years ago.
Still remember the pain when the 15k left my bank account.
I'm still years off finishing paying it. It wont be this high forever. I'm taking the slow route and leaving savings in mortgage.
If you die, HECS dies with you.
Bank is giving me 4.75% (Westpac, Banksa)
7-4.75= 2.25%
I was earning 8-20% in shares before but had to sell all to buy house. I can pay off HECS but choose not to as I need that money for emergencies or peace of mind. I am ok with losing 2.25% plus tax on 4.75% income.
5.74% on my 380,000 mortgage beats 7% on my 30,000 HECS.
Simps don’t understand you pay from your mortgage from already taxed income :P
You also pay your hecs from a taxed income
Good point. You also have to take the compounding effect into account - is your home loan for 25 or 30 years. Will your hecs debt last that long?
And hecs prob won’t be 7% for long.
I could pay off all my HECS right now, but it would wipe out almost all of my current available savings.
So I've chosen to pay off around 60%, and the rest should be able to be repaid within the next four years.This way, I still have a decent amount of cash on hand in case of emergencies.
Paid it off last year thank fark after 8 years and $50K debt.
Mate. Took me 15 years to finally pull the trigger to pay it off once and for good. Been a low earner for the most of my life.
Dropped a 4k lump sum to finally pay it off. Feels good
Going to take the $64k out of redraw to pay it off in full next week, smaller hit than the home loan rate and probably will be next year too, plus $8k~ a year extra in salary once they stop leeching off the payslip. Was going to use the cash to buy a Mazda 3 but will be driving my late 00's Fiesta a bit longer I guess.
My hecs is affecting my serviceability for a home loan, so for the first time in my life i am actively looking at ways to pay this down. However at the same time i won't be able to pay the whole thing off this year so i won't be paying anything extra.
even so, wouldn't indexation just apply to the remaining balance?
Correct.
Too close to the finish line (retirement) to bother paying any off now. The threshold is easy to stay under. Plus I'm still adding to it now. I might get to a million owed one day. I hope I get a telegram from the ATO.
Will your super income put you above the income threshold? I saw that hecs has to cone out if it does.
I'm looking at paying my loan down by about half, I just don't want that 7% to snowball if inflation stays high for a few years because I'm nowhere near paying it off via paychecks.
Anyone signed up to a new credit card to pay off their HECs?
Ideally trying to maximise QFF POINTS in hindsight of this stitch up we call… debt.
References: Posted in https://www.ozbargain.com.au/node/774493#comment-13765443
Which QFF CC would you get? https://cardsandbanking.qantas.com/compare-credit-cards?gad=…
You would be rolling the dice to apply for a card, have it approved, receive the card in the mail, make the payment to ATO and have it processed by the 31 May.
The biggest hold ups would be the approval and mailing process for the card and giving the ATO a few days to process the payment as everyone rushes to make payments as the deadline approaches.
citi premier qantas
their citi payall function lets you direct deposit money into another account such as ATO - ie. no fees up to 20k per month.
this is fee free till october this year
but as above you probably won't get this in in timeThis does not work as PayAll doesn't allow you to deposit into a BPAY account.
you need to make the deposit to RBA bank account. you just need the payment reference number on your HECs loan
https://www.ato.gov.au/general/paying-the-ato/how-to-pay/oth…
I don't think payments to government qualify for rewards points.
The cards I ended up getting:
1 Westpac ALTITUDE REWARDS BLACK
https://www.westpac.com.au/personal-banking/credit-cards/rew… [definitely get it if you're already a Westpac Member] - got digitally approved 18/5/23- 140,000 bonus Altitude Points with $6k+ spend on eligible purchases† within 120 days of card approval^.
- †Eligible purchases do not include interest, fees and charges, cash or ATM cash advances, cash equivalent transactions, gambling transactions, a purchase from or payment to a local, state or federal government or government related agency, BPAY or similar transactions (such as Post Billpay), refunds and balance transfers debited from the card account.
2 NAB Qantas Rewards Premium Credit Card
https://www.nab.com.au/personal/credit-cards/qantas-rewards/… - awaiting for approval as of 19/5/23- 70,000 bonus Qantas Points when you spend $2,000 on everyday purchases within 60 days of account opening.
- Transactions that don’t earn points include: Cash advances, bank charges, balance transfers, buying foreign exchange or travellers cheques, ATO payments, transactions where a cardholder uses a card to access linked transaction accounts, and transactions for gambling or gaming purposes.
All the transactions come up as 'Beem' oppose to ATO with the banks/credit cards … so who knows if it works.
Was also able to do more than $2K+ a day on the Altitude Black card via Beem (just change the amount every time) :)
Thanks for your input everyone!
Westpac have exclusive deals with Shopback as well :)
I think most people will take their HECS to their graves.
They tightened the rules to chase workers overseas. They'll probably do the same for deceased estates with hecs debts. I just paid mine off a few years ago and good riddance. Never going back to uni again.
Well that should be implemented for future hecs debt, kinda shitty of them to change the rules on the whim.
I wish I could clear mine. Sometimes I wish I did a trade instead.
Never too late to do a trade (absent any permanent physical disability).
Nop. I won't be paying. Coz I don't have any debt :-D ::naked-dance::
I was gonna pay it off, wonder if I should set up a credit card with a good sign up points deal. Pay via bpay to avoid the card fee and then pay off the credit card. Would this work or am I missing something?
Edit: Nvm, bpay transfers aren't eligible for points :(
Citibank premier with payall is fee free, use direct deposit option to pay ATO
Wouldn't work, payment to ATO is not considered eligible purchase for minimum spend requirements or point requirements.
Use Sniip but you will pay a small fee.
it does, payall isn't your typical credit card purchase. you need to make sure you make a direct deposit to the RBA account through Payall. I've had it paid every time.
@May4th: Apologies you're right, PayAll would work. Unfortunately won't be able to set up card and payall by end of May.
Yes, I just got a $22,000 loan to pay mine off. Interest in loan is only 6.7%
Thats up there with about the worst financial planning idea I've ever seen…
I'm impressedJesus christ my eyes
pretty sure it's a troll post
If they pay it off in a hurry (<12 months) they’d be ahead since the 6.7% loan would be calculated daily.
At current actual progress rate, my loan will take ~300 years to pay
If you die tomorrow with 100k hecs debt you have last laugh against ATO. Not that I'd recommend it.
It would be a bad debt the Cth Government deserves to have, given how many CSP places they offer for courses that have wayyy more grads than actual jobs.
Just sucks that it's an 'interest free loan' but because my wages haven't gone up anything close to 7% that I'm basically paying 4% interest on it this year
it's worse, whatever money you have left over is now worth 7% less (underestimate imo) at the shops as well.. that's why when the job just peddled the 3-4% increase for 'exceptional performance', I aggressively pursued other roles and landed a 25-30% increase elsewhere - sad that it's the only real way to get ahead, and office jobs do not reward hard work and loyalty
When does the withheld HECS from your income get applied? Is it at June 30?
If I pay off all my HECS, does the withheld HECS amount get refunded?
After you submit your return, I believe. Indexation is always at June 1, but my withheld contributions have only been applied in July/August (when I do my return).
If you pay it off early, the withheld will be included in your return, yes.
Potential Forgiveness or Write-Off: Depending on the student loan program and your circumstances, there may be provisions for loan forgiveness or write-off after a certain period or under specific conditions. If you pay off your loan early, you may forfeit the opportunity to have a portion of your debt forgiven or written off in the future.
With hecs debt mounting up, I'd say there's a good chance of this happening in the future. The indexation is just a way for the gov to get people to pay it voluntarily. Still hecs is not like other debt there's no reason to pay it off sooner.
yes, like death or terminal illness..
Wow- has the ATO forgiven HELP Loans before? First time I've heard of this.
Wasn't planning to, but noticed that after this year's PAYG contributions I'd only be a few thousand short, so thought I might as well clear it and delete another saver account from my bank (been making additional contributions for ~18 months now). I can float what my contributions would be so paying now and claiming them back at return time isn't an issue.
See above, apparently they’ll index hecs before they count your employer contributions. Might be worth paying it off in full now.
I don't earn enough to have to pay it so I won't.
I paid the rest of mine off a couple of years ago just before buying my first house. When I was trying to get a home loan it looked better to have less savings but also less debt/repayments, and could therefore borrow a little more. This was direct through Commbank.
On the topic of voluntary contribution, isn't it better to just make contributions to your super instead of your HECS? At least you'll get a immediate tax break from that and it'll probably beat the indexation in the long run.
If pay super voluntary contributions, is that's not tax deductible? But you save the 15% super tax. Probably better than the 7.1% indexation for repaying hecs.
Hmm, pay off my 50k debt in one go or keep it in the house deposit fund… :/
RBA want inflation down and won’t stop at ruining everyone to get it, seemingly. So, I think you’d be better off at 5.25% savings, even though you’ll pay tax on the earnings. Also, more flexibility and you sound like you want a house.
I find it unfair that the ATO withholds/deducts your money the entire year (that could be earning interest) but doesn't use it to reduce the amount of indexation it charges on your loan.
sort of.
Its a favour to the financially unsound.
I think you can just tell your employer that you dont have a HECS and then sort it out at tax time?
Correct, as long as you pay your tax bill they don't care. There's even a forum post on the ATO website of them telling somone it's ok.
This is what I do
ATO charge a hefty % payment fee if you use credit card.
not worth it for points.