What Should I Do About My Crazy HECS Debt?

Hi Barefoot,

I will get straight to the point. I have a crazy HECS debt to the tune of $70,000. I am getting hitched in September to the the most amazing girl on the planet. What should I do?

Tom

Hi Tom,

First, you should definitely marry her.

Second, don’t bother paying any extra off your (admittedly gigantic) HECS-HELP debt.

Not even a dollar.

All the hoo-ha about the Government’s proposed changes to the HECS-HELP rules are focused on the compulsory repayments that come out as a percentage of your salary: they’re proposing to lower the starting income threshold by almost $13,000 (to $42,000).

In doing so the Government has all but given up trying to get people to make voluntary contributions -- the bonus was scrapped from 1 January 2017. So why would you bother rushing to pay off the cheapest loan you’ll ever get -- it simply increases with the general cost of living -- when it’ll come out of your salary anyway?

The answer is you shouldn’t, Tom. Forget about paying any extra and direct your cash into saving up for a deposit on a castle to share with the most amazing woman on the planet.

And one more thing for readers:I’m writing this from a hotel room in the US of A, where the average college student graduates $35,000 in debt to a financial institution that charges commercial interest rates. And it’s one of the few debts that doesn’t get wiped out in bankruptcy. We got it good!

Scott