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Your HECS-HELP debt could rise by $900 next week


Uni debt is indexed to inflation, meaning a hefty 3.90% rise this year. But it's still the cheapest debt you'll ever get.

Your uni debt will increase by 3.90% on 1 June. This is because inflation is rising fast. And higher education loans (HECS, HELP, VSL, SFSS) are adjusted once a year for inflation.

This is a notable increase. In 2021 student debts were indexed at just 0.6% when inflation was low.

The average Australian higher education debt is $23,685. If you apply a one-off 3.90% adjustment, that grows by $923. That's $24,608 total.

I've got a big uni debt: What do I do?

The indexation rate is quite high this year. But the general financial advice for Australian government study and training loans holds true: It's the least urgent debt you'll ever have.

You could rush to pay it off, because getting out of debt means more money in your pocket. And paying some of it off before 1 June will mean the remaining debt increases by a smaller amount.

But if you have other outstanding debts you're better off dealing with those first.

Your student debt can effect a loan application. But high interest debts like credit cards or personal loans should always come first. If you have a mortgage, you obviously have to keep making your monthly repayments. But you can also repay a bit extra or put it in an offset account.

This would save you more money than paying off your student debt. Even with that 3.90% adjustment.

Most Australians are better off just working and letting that compulsory HECS-HELP repayment pay off the debt before you even know it's gone (if you're earning above the repayment threshold).

But the 3.90% indexation is a good reminder not to forget about the debt completely. If you're not working, it's good to be aware of how much your debt could grow. Especially if inflation stays high for the next few years.

If you're working, you could pay off a chunk of it before 1 June and minimise the loan amount before the indexation hits.

And it's also worth looking at your paycheque to see just how much goes towards your uni debt each month. If you're earning $60,000 a year before tax you'd be paying $125 a month to service your higher education debt.

If you're earning $90,000 a year that's $450 a month. What else could you do with that money? You could invest it through an ETF or another form of investment.

Need help saving money? Check out all our money saving tips.

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