OK, you have just graduated from University after four hard years! What do you get at the end of it? Unless you are very lucky, as well as a degree, you will accumulate quite a large debt, courtesy of the Australian Government.
This is now known as Higher Education Loan Programme (HELP). When I graduated from RMIT, it was known as Higher Education Contribution Scheme (HECS). I guess many of today's graduates are in no doubt that the money is a loan and is to be repaid!
When I graduated from RMIT, I was lucky and HECS only kicked in at the second of my four year engineering degree. So I only had 3 years worth of HECS fees to repay. In those days, my debt was in the region of $7,500, which is quite a sizable chunk of money. These days, I have heard of a HELP debt of $20,000 or more for an engineering course.
So what can you do to reduce that debt. Here are some tips.
- Repay some of the debt on a voluntary basis. The ATO has a good explanation. Essentially, you get a 10% discount of the repayment that you made. So the more you repay, the bigger the discount.
- Get your employee to contribute to the debt. If you are an excellent graduate and many companies are chasing after your skills, you may be able to negotiate it as part of your salary package, such as salary sacrificing. The ATO also has a note on this. Salary sacrificing also reduces your taxable income.
- Pay it off as fast as possible. Your HELP debt will be subject to CPI, so every year of outstanding debt, it will increased according to inflation. For the year 2007, it was indexed by 3.4%.
However, if you study hard and start your career with a solid groundings, that is what you should be aiming for. Repaying the debt will be well within your reach.
Around the net, I also found some other items that may help you save some money as well.