Student debt remains a big problem for Australians with nearly three million struggling to repay their loans.
The average person takes about 10 years to pay off student debt and now the Greens are calling for the HECS-Help debt to be wiped out completely.
“Young Australians are actually swimming in debt,” finance expert Effie Zahos said today.
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A recent report on consumer policy from Canstar showed that Gen Z – those up to the age of 26 – are nearly $45,000 in debt.
The report found that Millennials are closer to $57,000 in personal debt in buy-it-now/pay-later situations like car loans and credit cards.
“Imagine being that age and coming out with that amount of debt — it’s actually a barrier for you to gain financial freedom and ask for a deposit,” Effie said.
While for other generations getting help with their student debt was a necessity, tuition is now much more expensive for Gen Z and Millennials.
Effie said HECS-Help is a free loan, but you have to pay it back once your income reaches a certain threshold.
“What’s interesting is that it’s indexed to inflation and those numbers come out at the end of this month,” Effie said.
“During the pandemic, inflation for the April to June period was actually back and fell by 1.9, which made lending cheaper in a sense.”
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She said that although these types of loans are not entirely free, they are a cheaper form of debt than a bank or car loan.
The Greens’ proposal to erase HECS-Help debt would cost about a third of the $180 billion in tax cuts and result in the cancellation of 20% of outstanding debt each year over five years.
“With the government now, there is already a targeted measures approach,” Effie said.
“If you are a student who has studied nursing or medicine and you go to an area, this fee is already waived.
Watch the full segment with Effie above
Effie Zahos is the editor of Canstar, where the report originated. The information provided on this website is of a general nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website, you should consider the suitability of the information to your objectives, financial situation and needs.
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