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Talk HECSy To Me · She's On The Money

• 0:00
  Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud Yr
• 0:04
  Speaker 1: the Order Kerni Whaltbury and a waddery woman. And before
• 0:08
  Speaker 1: we get started on She's on the Money podcast, I
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  Speaker 1: would like to acknowledge the traditional custodians of the land
• 0:14
  Speaker 1: of which this podcast is recorded on a wondery country,
• 0:18
  Speaker 1: acknowledging the elders, the ancestors and the next generation coming
• 0:22
  Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
• 0:27
  Speaker 1: and the storytelling of you to make a difference for
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  Speaker 1: today and lasting impact for tomorrow.
• 0:33
  Speaker 2: Let's get into it.
• 0:34
  Speaker 3: She's on the Money, She's on the Money.
• 0:57
  Speaker 4: Hello, and welcome to She's on the Money, the podcast
• 1:00
  Speaker 4: us that digs into finance news you actually care about
• 1:02
  Speaker 4: in a way you can actually understand. I'm Victoria Devine,
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  Speaker 4: your finance friend with all the tea, and today I'm
• 1:08
  Speaker 4: spilling on what's probably the juiciest headline of the year
• 1:11
  Speaker 4: for anyone who's still feeling the very heavyweight of their
• 1:14
  Speaker 4: hex or help debt. Today I'm going to be chatting
• 1:17
  Speaker 4: with you about an Australian government proposal that could mean
• 1:21
  Speaker 4: a twenty percent cut on your student loan balance, which
• 1:24
  Speaker 4: sounds very very good, and let's be real, for most of.
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  Speaker 2: Us, that's not just new, that's life changing.
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  Speaker 4: However, my friends, there is actually a lot to unpack here,
• 1:34
  Speaker 4: from what these changes actually mean for your repayments to
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  Speaker 4: how they could affect your budget in the long run.
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  Speaker 4: So my friend, grab a coffee, sit tight, and let's
• 1:42
  Speaker 4: break it down together. All right, So here's the lowdown
• 1:45
  Speaker 4: on the HEX and Help changes. First, the headline graber
• 1:49
  Speaker 4: a twenty percent reduction on all outstanding student loan balances
• 1:54
  Speaker 4: if the Labor government is re elected. This is going
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  Speaker 4: to take effect on the first of June twenty twenty
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  Speaker 4: five and apply to everyone with a HEX or Help
• 2:03
  Speaker 4: debt VET or similar student debt. Let's break down what
• 2:06
  Speaker 4: that actually means with some numbers, though, because stats girl
• 2:10
  Speaker 4: and we have done some maths. So first, a twenty
• 2:14
  Speaker 4: percent debt reduction. Say you're an average oozy grad with
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  Speaker 4: a HEXDET of twenty seven thousand, six hundred dollars. Under
• 2:21
  Speaker 4: this new plan, you're going to get twenty percent of
• 2:23
  Speaker 4: that balance completely wiped out. So instead of owing twenty
• 2:26
  Speaker 4: seven thousand, six hundred dollars, you'll see about five and
• 2:29
  Speaker 4: a half grand raised from your debt. That brings your
• 2:32
  Speaker 4: outstanding balance down to twenty two than one hundred dollars,
• 2:35
  Speaker 4: which is not too.
• 2:36
  Speaker 2: Shabby, right.
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  Speaker 4: Or Let's say you're getting through your repayments and you
• 2:40
  Speaker 4: only have ten grand left on your HEX debt. You'll
• 2:43
  Speaker 4: see a two thousand dollars reduction, dropping your total to
• 2:47
  Speaker 4: eight grand. Now, let's sideline a little bit and have
• 2:50
  Speaker 4: a quick chat about the higher repayment threshold that's been proposed.
• 2:54
  Speaker 4: The next change is the repayment threshold, and that's the
• 2:57
  Speaker 4: minimum amount you need to earn before HEX repat's stuck
• 3:00
  Speaker 4: getting taken out of your pay It sounds good on
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  Speaker 4: the surface right right now, you start repaying your HEX
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  Speaker 4: stet once you're earning over fifty four, four hundred and
• 3:09
  Speaker 4: thirty five dollars a year. But with this new plan,
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  Speaker 4: that threshold is going to rise to sixty seven thousand dollars.
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  Speaker 4: So let's go in with an example. Say you're a
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  Speaker 4: recent grad and you're making sixty grand a year. You're
• 3:21
  Speaker 4: currently just above the threshold and would be paying a
• 3:24
  Speaker 4: portion of your income towards your HEX SDET every single
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  Speaker 4: pay cycle. But under this new proposed system, you'll actually
• 3:31
  Speaker 4: full blow the threshold and won't need to start paying
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  Speaker 4: back your HEX until you earn above sixty seven thousand dollars.
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  Speaker 4: That's extra cash in your pocket right now to help
• 3:40
  Speaker 4: with rent and bills, or maybe even just saving up
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  Speaker 4: for a big goal, which sounds, as I said, on.
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  Speaker 2: The surface, really good.
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  Speaker 4: I have a lot to say and it'll all make sense,
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  Speaker 4: but there are a few things that I want to
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  Speaker 4: get through before we dive into a deeper part of
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  Speaker 4: the conversation.
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  Speaker 2: So let's touch on the cost.
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  Speaker 4: Of living benefits really quickly. So what do these changes
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  Speaker 4: mean day to day? Of you're going to feel a
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  Speaker 4: little bit less pressure when it comes to rent and bills.
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  Speaker 4: But let's say you're making sixty five thousand dollars a year. Currently,
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  Speaker 4: you're going to be required to make X repayments, which
• 4:11
  Speaker 4: are probably around two thousand dollars a year depending on
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  Speaker 4: your exact income bracket. With this new threshold, you'd get
• 4:18
  Speaker 4: to keep that two grand in your pocket, and in
• 4:20
  Speaker 4: today's economy, that cash could go towards your rising grocery
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  Speaker 4: bills or rent or saving.
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  Speaker 2: Up for your first home.
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  Speaker 4: But if you're earning just over that threshold stay sixty
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  Speaker 4: eight thousand dollars, your repayments will still be smaller than
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  Speaker 4: before thanks to the new twenty percent debt reduction, meaning
• 4:36
  Speaker 4: that your overall balance and yearly repayments are reduced. Sounds
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  Speaker 4: kind of sexy, right these changes. They do come at
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  Speaker 4: a time when the cost of living it feels like
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  Speaker 4: it's squeezing us all. So for some this could be
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  Speaker 4: a really real relief. By bumping up this payment threshold,
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  Speaker 4: many of us would have a little bit more breathing
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  Speaker 4: room each month before our student debt started kicking in,
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  Speaker 4: and that twenty percent reduction, that'sands of dollars that you
• 5:01
  Speaker 4: don't have to worry about anymore. But as with anything
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  Speaker 4: money related, it's really important to know the details so
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  Speaker 4: that you can decide the best way to approach your
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  Speaker 4: repayments in the long run. After the break, I'm going
• 5:13
  Speaker 4: to deep dive into the nitty gritty of how these
• 5:15
  Speaker 4: changes actually play out across different income levels. At first glance,
• 5:20
  Speaker 4: lowering the minimum repayment sounds like a win for your budget, right,
• 5:23
  Speaker 4: But there's a little bit more to the story.
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  Speaker 2: Stick around, because.
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  Speaker 4: What seems like short term relief might actually have a
• 5:29
  Speaker 4: few unexpected twists. All right, my friends, we are back
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  Speaker 4: and I'm excited to talk about this. It is time
• 5:39
  Speaker 4: to get into the nitty gritty of how these changes
• 5:41
  Speaker 4: actually play out across different income levels. At first glance,
• 5:45
  Speaker 4: lowering the minimum repayment sounds great for your monthly budget.
• 5:48
  Speaker 4: Everybody wants a.
• 5:49
  Speaker 2: Little bit more wiggle room.
• 5:50
  Speaker 4: But when you take a closer look, for a lot
• 5:53
  Speaker 4: of people, it could mean holding onto that debt for
• 5:56
  Speaker 4: much longer. Now, obviously, in true Victoria divine fashion, we
• 5:59
  Speaker 4: have an entire spreadsheet. I'm going to dive into exactly
• 6:04
  Speaker 4: what that looks like.
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  Speaker 2: Though.
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  Speaker 4: For incomes at the lower end of the scale, like
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  Speaker 4: sixty thousand dollars and seventy thousand dollars, the new minimum
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  Speaker 4: repayment requirement is either zero dollars or it's been significantly reduced,
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  Speaker 4: so for example, four hundred and fifty dollars annually for
• 6:19
  Speaker 4: seventy thousand dollars a year. This reduction essentially delays repayment,
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  Speaker 4: especially for those earning sixty thousand dollars, where the debt
• 6:27
  Speaker 4: theoretically would never be paid off under minimum payments alone. Previously,
• 6:33
  Speaker 4: someone who earned seventy grand a year, would have made
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  Speaker 4: an annual payment of seventeen hundred and fifty dollars, which
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  Speaker 4: would allow them to pay off their debt if they
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  Speaker 4: remained at that income level in about fifteen point eight years. Now,
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  Speaker 4: under this new proposal, the drastically reduced payment of four
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  Speaker 4: hundred and fifty dollars leads to an indefinite repayment timeline
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  Speaker 4: so forever, as it doesn't actually keep pace with the
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  Speaker 4: debt growth. Let me talk to my spreadsheet for a
• 7:02
  Speaker 4: hot second. So let's pretend you have graduated, right, So
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  Speaker 4: if this comes into effect on the first of June
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  Speaker 4: twenty twenty five, you'll get your twenty percent reduction, which
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  Speaker 4: arguably is very exciting at this point in time, and
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  Speaker 4: then the new monthly minimum repayments will apply.
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  Speaker 2: Right.
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  Speaker 4: So we've done some maths in the background, and I
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  Speaker 4: have used the number of thirty thousand, seven hundred and
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  Speaker 4: sixty three dollars because that is the average textet of
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  Speaker 4: somebody in their twenties, right, So this number is what
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  Speaker 4: I'm always going to fall back on. As of the
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  Speaker 4: first of June twenty twenty five, if you get your
• 7:37
  Speaker 4: twenty percent deposit, that will mean that your texttet drops
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  Speaker 4: to twenty four thousand, six hundred and ten dollars.
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  Speaker 2: That is now the number that I'm going.
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  Speaker 4: To be talking about because that's your post twenty percent discount. Right.
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  Speaker 4: So historically, if you earned sixty thousand dollars, your old
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  Speaker 4: minimum and your repayment would have been six hundred bucks, right,
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  Speaker 4: And that means if you extrapolate that out, it would
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  Speaker 4: have taken you forty six years to pay that debt off. Okay,
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  Speaker 4: So now we go back to this sixty thousand dollars income.
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  Speaker 4: You now have twenty four thousand, six hundred and ten dollars.
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  Speaker 4: But because of the new minimum monthly repayment threshold, you
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  Speaker 4: no longer make any hextet repayments, which means, hypothetically you're
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  Speaker 4: never going to pay off your hextet. Now, is that
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  Speaker 4: the worst thing in the entire world if you never
• 8:28
  Speaker 4: plan on earning over sixty thousand dollars.
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  Speaker 2: Absolutely not.
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  Speaker 4: We do have to think of a few things here though. One,
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  Speaker 4: if you are ever going to get property, your hextet
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  Speaker 4: is ultimately going to reduce how much you're able to borrow.
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  Speaker 4: But also, on the bright side of things, a hex
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  Speaker 4: and help debt is the only type of debt in
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  Speaker 4: Australia that dies with you, So it's not going to
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  Speaker 4: be passed on to anybody else, it's not going to
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  Speaker 4: be taken out of your estate when you pass along.
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  Speaker 4: It is something that is going to just cease to
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  Speaker 4: exist at the end end of your life, which sounds
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  Speaker 4: a little bit morbid, but I think it's really important
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  Speaker 4: to preface it there too, because a lot of us
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  Speaker 4: get really stressed about the idea of carrying debt and
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  Speaker 4: then passing debt on.
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  Speaker 2: Right.
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  Speaker 4: Let's jump up though, because if you're on an income
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  Speaker 4: of seventy thousand dollars per annum, historically your old minimum
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  Speaker 4: repayment was seventeen hundred and fifty dollars a year, which
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  Speaker 4: means it would have taken you fifteen point seven seven
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  Speaker 4: years to pay off, which is, honestly, in the grand
• 9:28
  Speaker 4: scheme of things, not that bad. However, your new minimum
• 9:32
  Speaker 4: monthly repayment as of the first of June twenty twenty
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  Speaker 4: five will change to four hundred and fifty dollars per annum,
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  Speaker 4: which means you'll never pay off your hextet. You will
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  Speaker 4: literally be paying off your hex debt every single year.
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  Speaker 4: But because of the average rate of indexation, which I
• 9:49
  Speaker 4: have used the number two point seven because that is
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  Speaker 4: the average rate of indexation historically.
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  Speaker 2: It means you're never going.
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  Speaker 4: To pay off your debt, but you will be paying
• 9:59
  Speaker 4: that debt off every single year. But because of the
• 10:01
  Speaker 4: rate of indexation, you are actually going to recrue more
• 10:05
  Speaker 4: debt each and every single year, even though you're paying
• 10:08
  Speaker 4: off the minimum repayments. If we jump up to eighty
• 10:12
  Speaker 4: thousand dollars a year, your old minimum repayment or as
• 10:15
  Speaker 4: it is right now today is twenty eight hundred dollars
• 10:18
  Speaker 4: a year, it means that in just under ten years,
• 10:21
  Speaker 4: so nine point eight five years, you will be able
• 10:24
  Speaker 4: to pay off the entirety of your hex stet. However,
• 10:27
  Speaker 4: your new minimum monthly repayments as of the first of
• 10:30
  Speaker 4: June twenty twenty five, will be nineteen hundred and fifty dollars,
• 10:34
  Speaker 4: pushing your years to pay that debt off up to
• 10:37
  Speaker 4: fifteen years and six months at the end of the day.
• 10:41
  Speaker 4: This means that you are ultimately going to be paying
• 10:44
  Speaker 4: more indexation over that period of time, and it is
• 10:47
  Speaker 4: going to stay with you even longer. This obviously extrapolates
• 10:51
  Speaker 4: out all the way up to incomes of one hundred
• 10:54
  Speaker 4: and seventy nine nine hundred and ninety nine dollars, because
• 10:57
  Speaker 4: anything above one hundred and eighty thousand dollars means that
• 11:00
  Speaker 4: there will be absolutely no change. But I think you're
• 11:03
  Speaker 4: starting to see my point. And my point is, even
• 11:07
  Speaker 4: with a very attractive twenty percent discount and the fact
• 11:11
  Speaker 4: that your minimum monthly repayments are dropping, it sounds all
• 11:14
  Speaker 4: really good because we all want cash in our back
• 11:16
  Speaker 4: pocket to spend on bills and rent.
• 11:18
  Speaker 2: Like life is tough.
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  Speaker 4: Ultimately, this debt is either going to never be paid
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  Speaker 4: off under this new scheme, or it's going to take
• 11:25
  Speaker 4: significantly longer, which is going to impact your ability to
• 11:29
  Speaker 4: create wealth over the long term, which to me is
• 11:32
  Speaker 4: the most concerning part of this, right because ultimately my
• 11:36
  Speaker 4: job is to help you create wealth and keep wealth
• 11:38
  Speaker 4: and put you in the best possible financial position. And
• 11:40
  Speaker 4: I think there's been a lot in the media about
• 11:42
  Speaker 4: this being super positive. Who doesn't want a twenty percent
• 11:45
  Speaker 4: discount on their hecks. I know I'm going to welcome that,
• 11:48
  Speaker 4: but that doesn't actually mean that you're in the best
• 11:50
  Speaker 4: possible position. The other thing that slightly frustrates me is
• 11:54
  Speaker 4: this is a one time discount, So right now, if
• 11:57
  Speaker 4: you're at university or you're planning to start universe, you're
• 12:00
  Speaker 4: not going to benefit from this at all. And those
• 12:03
  Speaker 4: calculations that I used were based on that twenty four
• 12:06
  Speaker 4: thousand figure, not the thirty plus thousand figure. It's going
• 12:10
  Speaker 4: to take you even longer to pay off your debt
• 12:12
  Speaker 4: with lower minimum repayments. So to summarize all of this,
• 12:16
  Speaker 4: what does it all mean for those in lower and
• 12:18
  Speaker 4: middle income brackets. The new system gives you arguably immediate
• 12:22
  Speaker 4: relief by lowering repayments, which can help with current cost
• 12:25
  Speaker 4: of living pressures.
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  Speaker 2: But on the flip side.
• 12:28
  Speaker 4: Sticking to these minimum repayments could mean carrying that debt
• 12:31
  Speaker 4: for years longer than you might have under the old rules,
• 12:34
  Speaker 4: and that doesn't sit well with me. Maybe the extra
• 12:37
  Speaker 4: breathing room is exactly what you need right now, and
• 12:40
  Speaker 4: it's not a bad thing to say. No, V, I
• 12:42
  Speaker 4: don't even care about having this debt for longer. I
• 12:44
  Speaker 4: need a little bit of wiggle room in my budget.
• 12:46
  Speaker 1: Go.
• 12:47
  Speaker 4: I get it, I really do, and that's great. But
• 12:50
  Speaker 4: if you're thinking long term, you might decide to chip
• 12:52
  Speaker 4: away at that debt a.
• 12:54
  Speaker 2: Bit faster to free yourself up sooner.
• 12:56
  Speaker 4: It all depends on what your values are and what
• 12:58
  Speaker 4: you're working towards. Importantly, you need to remember that this
• 13:02
  Speaker 4: isn't a one size fits all solution. It's about understanding
• 13:05
  Speaker 4: how these changes impact you personally and making a choice
• 13:09
  Speaker 4: that aligns with your own goals and values. And over
• 13:12
  Speaker 4: the last week my dms have absolutely blown up with
• 13:15
  Speaker 4: people going V, I'd love to see the stats. V.
• 13:18
  Speaker 4: I'd love to see the numbers. V. This doesn't sit
• 13:20
  Speaker 4: with me. Well, I know the idea of a twenty
• 13:22
  Speaker 4: percent discount is really good, but what does this mean
• 13:25
  Speaker 4: for me holding debt for longer?
• 13:27
  Speaker 2: You went wrong.
• 13:27
  Speaker 4: I've done the numbers and it does put you in
• 13:30
  Speaker 4: a worse off wealth position in the long term. When
• 13:33
  Speaker 4: we posted about the news on Instagram on the She's
• 13:36
  Speaker 4: on the Money account, a lot of you were really
• 13:38
  Speaker 4: quick to ask why the new rate of indexation that
• 13:40
  Speaker 4: was announced hasn't been applied yet, and fair enough, because
• 13:43
  Speaker 4: it's super confusing.
• 13:44
  Speaker 2: But here's the down low.
• 13:46
  Speaker 4: While the government announced that they're lower the indexation rate,
• 13:49
  Speaker 4: the actual legislation and they g it official hasn't been
• 13:52
  Speaker 4: passed through parliament. Yet that means that right now the
• 13:55
  Speaker 4: old indexation rate is still in effect and we're all waiting.
• 13:59
  Speaker 2: For that fine stamp of approval.
• 14:01
  Speaker 4: If it does pass, the ATO will apply that low
• 14:04
  Speaker 4: or rate retroactively, and anyone eligible could see a credit
• 14:08
  Speaker 4: or a refund.
• 14:08
  Speaker 2: Which is kind of attractive.
• 14:10
  Speaker 4: So hang tight and we'll keep you updated as things develop.
• 14:14
  Speaker 4: She's on the Money we are all about giving you
• 14:17
  Speaker 4: the tools to take control even when changes come flying
• 14:20
  Speaker 4: at you. If you found my breakdown helpful, please be
• 14:23
  Speaker 4: sure to subscribe. I am literally here to make the
• 14:26
  Speaker 4: money stuff easy for you, and I want to say
• 14:28
  Speaker 4: that I want to make it fun along the way,
• 14:30
  Speaker 4: But right now this doesn't feel that fun. So I
• 14:33
  Speaker 4: hope you have a beautiful weekend. If you have any questions,
• 14:36
  Speaker 4: always slide into our DMS. And if you've listened this far,
• 14:39
  Speaker 4: I'm going to upload the spreadsheet of all of my
• 14:41
  Speaker 4: working out to the website so you can download it
• 14:43
  Speaker 4: and have a little bit of.
• 14:44
  Speaker 2: A snoop see you later, guys.
• 14:52
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