As Australians, we are extremely lucky with our quality of education. Everyone who works hard is able to attend university thanks to student loans like HECS and ABSTUDY. It’s important not to forget that this is a loan and not a gift though, meaning, at some stage students will need to pay this back. Anybody who has been, or is currently attending university knows the constant worry of student debt, especially with the continual change in laws. To help you out, here is a quick break down of the law of student loans.
Why are there now changes in student debts?
Well, the Mid Year Economic and Fiscal Outlook (MYEFO) made some adjustments to the higher education sector and that’s what has brought about all the recent changes in regards to student debt. The MYEFO is a budget that outlines the government’s spending priorities, so essentially the government is hoping to retrieve the money given to students, faster.
What actually are the changes?
Before the reforms, if you were earning less than $55,874 you didn’t have to start paying back your student loan. With the new changes this threshold has been lowered to $45,000. At the moment, many graduates are struggling to find work (and when they do the salaries are relatively low) meaning, less and less people were paying off their student debt. To counteract this, the new threshold will mean its more attainable for graduates to begin paying off their loans.
How much will I have to pay?
As before, how much you pay back will still depend on how much you earn. If you’re earning the minimum of $45,000 you will only be paying back 1% of the loan each year. This amount goes up as you earn more. However, the maximum you will have to pay off is 10% per year and that’s only when you are making $131,000 or more.
The bottom line is, there are changes, and there will always be changes when it comes to government funding. As much as it sucks for students that the repayment threshold has been lowered, the repayments won’t actually make that much difference to your salary or your daily life. But, on the bright side, it also means your loan will be paid off sooner, and you will be free from your student debt sooner! These changes in the law are no reason to panic or to change your mind about going to university. It’s important not to forget how lucky we are to have government funding for our education at all!