HECS-HELL(P

Last week I discovered that I would be paying off a portion of my HECS debt at the conclusion of this financial year. I am 20 years old, in my third year (of four-and-a-half) at ANU, and I support myself entirely financially. It was shocking to discover that I had reached the threshold – how, at 20 years of age, and whilst studying full-time? I couldn’t believe it. Sure, I work pretty hard, but I haven’t even finished my degree yet. As a result of this harrowing discovery, I began to undertake some research to find the answers to this unforeseen cost before me - and let me tell you, what I found was even more shocking.

In 2017, the repayment threshold was at $56,000 (before tax). In 2018, the coalition government under former Prime Minister Malcom Turnbull, lowered the threshold to $52,000 (before tax). In 2019, under Prime Minister Scott Morrison, the threshold was lowered to $45,881 (before tax). This was an 11% drop -- the largest percentage fall in over 20 years, coined as a ‘budget-saving measure’. How on earth could a ‘budget-saving measure’ be justifiably put in place against the most financially strained age demographic?

this. Our system is broken, there’s no denying

I could not be more grateful that I was born in a country teeming with wide opportunities, particularly in the field of education, as I know so many young, bright individuals across the globe, as well as international students at Australian universities, who are not so lucky. Yet I can’t seem to understand why our system is pushing out the minds and bodies of less privileged Australians, by forcing HECS repayments at inconceivably low thresholds. Simultaneously, the cost of specific degrees has been raised astronomically – which is another issue in its entirety. The cost of university courses is tiered, or at least has historically been tiered, against the salary we can expect upon graduating with our degree. So how can a 20-year-old, self-supporting young woman, working at Bunnings Warehouse and a summer internship expect a salary that warrants the presumed salary from my degree, before I even complete it?

I hate to break it to you, but it gets worse. We’re always told ‘our HECS debt is the best loan we’ll ever receive’. Don’t get me wrong, there are ruthless loans in our economic environment that undeniably hold higher interest rates than our HECS debt. But wait, our HECS debt shouldn’t have interest rates, right? Well, it doesn’t, per say. Our HECS debt increases each financial year at a rate of approximately 1.5-2.5%, relative to the Consumer Price Index (CPI), commonly referred to as inflation. Yet, this 1-2% rise is not in fact relative to inflation at all. The RBA set the 2020 inflation rate at 0.87%. Therefore, under this theory, your HECS debt should have only increased by 0.87%. What a shock, it didn’t. In 2020, the HECS debt indexation rate was set to 1.8%. So, if I were to make between $46,620* and $53,827 (before tax) this financial year, I would pay 1% towards my HECS debt. This would mean that I am only paying off a portion of the indexation rate, coincidentally leaving .8% added to my HECS debt, similarly reflecting the rate of inflation. This is good news, but it’s pretty appalling news to know that I have to make compulsory payments to my HECS debt this financial year, which will in fact not decrease my HECS debt whatsoever.

I think it’s time Australia invested fairly into its future, and I think it’s damn time our government stops using us as a ‘budget-saving measure’.

* the threshold was raised to $46,620 in the 2020-21 financial year subject to the CPI (Consumer Price index).