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Bonus Episode: How HECS/HELP Debt is Changing · She's On The Money

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  Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr
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  Speaker 1: the Order KERNI Whoalbury and a waddery woman. And before
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  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
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  Speaker 1: of which this podcast is recorded on a wondery country,
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  Speaker 1: acknowledging the elders, the ancestors and the next generation coming
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  Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
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  Speaker 1: and the storytelling of you to make a difference for
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  Speaker 1: today and lasting impact for tomorrow.
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  Speaker 2: Let's get into it.
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  Speaker 3: She's on the Money. She's on the Money.
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  Speaker 2: Hello and welcome.
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  Speaker 4: She's on the Money, the podcast for millennials who want
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  Speaker 4: financial freedom.
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  Speaker 2: My friends, it is Victoria and I am.
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  Speaker 4: Back today with a solo episode, which is the first of.
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  Speaker 2: Maybe many solo rants to come.
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  Speaker 4: But I wanted to do a little micro bonus episode
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  Speaker 4: because a lot of you have been asking me recently
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  Speaker 4: about how hex and help debts have been changing, and
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  Speaker 4: I thought, instead of getting the whole team together and
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  Speaker 4: dragging everyone out of bed earlier than they want to
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  Speaker 4: get out of bed, I would just jump on the
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  Speaker 4: mic explain a few things, and hopefully over time this
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  Speaker 4: can be a reoccurring theme to make sure that we
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  Speaker 4: are as up to date with what's going on in
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  Speaker 4: the media and what's going on in politics as absolutely possible. So,
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  Speaker 4: after gut wrenching hikes last year that saw indexation jump
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  Speaker 4: to seven point one percent, our mate Treasurer Jim Chalmers
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  Speaker 4: outlined in the twenty twenty four federal budget recently that
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  Speaker 4: the government is changing the way that student loans are
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  Speaker 4: going to be indexed and they're going to be backdating
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  Speaker 4: it to June last year, which essentially means they're going
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  Speaker 4: to be wiping three billion dollars worth of debt. So
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  Speaker 4: today I thought i'd get you up to speed on
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  Speaker 4: how things are changing, what sort of amounts your debt
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  Speaker 4: is going to go down by, and how to receive
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  Speaker 4: a credit if you're eligible for one. So before we
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  Speaker 4: get there, let's just talk about why hex is actually changing.
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  Speaker 4: So basically, because we all know that the debt was
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  Speaker 4: increasing at a higher rate than wages. So if you're
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  Speaker 4: making minimum repayments, we found that many of your outstanding
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  Speaker 4: balances were then more than what they were the previous year,
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  Speaker 4: so that obviously is quite rude. So instead of interest
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  Speaker 4: charged on a HEX debt, our student debts had risen
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  Speaker 4: each year in line with what they call CPI, so
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  Speaker 4: consumer price index. This isn't a new concept. This has
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  Speaker 4: happened every year since HEX was introduced, so this isn't new.
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  Speaker 4: But after an inflation blow up last year and millions
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  Speaker 4: of us being absolutely slammed with really big increases, the
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  Speaker 4: government has decided to move to CAP index, which is
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  Speaker 4: actually the lowest out of CPI and the wage price Index.
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  Speaker 4: So instead of them slapping on that seven point one
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  Speaker 4: percent of consumer price Index to our HEX and help debts,
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  Speaker 4: they're going to move to the WPI, which again wage
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  Speaker 4: price index, which is approximately four point seven percent. But
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  Speaker 4: then when the budget came out, they are now estimating
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  Speaker 4: that to be around four percent. So last year was
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  Speaker 4: bad because obviously our debts increased by seven point one percent,
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  Speaker 4: and now they're saying, all right, that was pretty hectic,
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  Speaker 4: not so keen on that. Let's actually drop it down
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  Speaker 4: to four percent. And what we're going to do is
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  Speaker 4: backdate that. So anyone who paid that seven point one percent,
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  Speaker 4: we're going to give them a refund of what they
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  Speaker 4: have paid, So hex indexation is changing, and it's not
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  Speaker 4: just for this year. They've now introduced this idea that
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  Speaker 4: debts are going to increase in line with whichever is lower.
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  Speaker 4: So whether CPI is lower or WPI is lower, whichever
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  Speaker 4: is the.
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  Speaker 2: Smallest one, they're going to go with that. GPI.
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  Speaker 4: Just to step back a little bit, CPI essentially measures
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  Speaker 4: the movement in a price of like a fixed basket
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  Speaker 4: of goods and services. And it sounds really fluffy, but
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  Speaker 4: that genuinely is how they calculate it. They go to
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  Speaker 4: calls or woolies and basically have a number of goods
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  Speaker 4: and services that they basically benchmark the prices against. So
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  Speaker 4: then WPI, which is that wage price index, which you
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  Speaker 4: might not have heard before because we haven't really used
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  Speaker 4: this across the board for indexing anything that measures the
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  Speaker 4: movement in wages and the price employers pay for labor.
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  Speaker 4: So that's how much essentially our income increases each and
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  Speaker 4: every single year across the board on average. And that's
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  Speaker 4: why last year I was jumping up and down because
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  Speaker 4: the indexation rate on our superannuation was seven point one percent,
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  Speaker 4: but we didn't get pay rises in line with that,
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  Speaker 4: which is why I was asking everyone to go to
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  Speaker 4: their employer and push for that, because it is wild
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  Speaker 4: to think that you wouldn't be able to afford to
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  Speaker 4: purchase the same basket of groceries this year that you
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  Speaker 4: were able to last year. You should at least be
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  Speaker 4: in a position where your income is keeping up with
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  Speaker 4: being able to put the same amount of bread in
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  Speaker 4: a basket as.
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  Speaker 2: You were the year before.
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  Speaker 4: Right, So both are measured across the economic quarters of March, June,
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  Speaker 4: September and December, so that's when it's all reported. And
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  Speaker 4: as I said before, the changes are going to be
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  Speaker 4: backdated to basically raise last year's jump, which I think
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  Speaker 4: is lowkey, very sexy, and it's going to be applied
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  Speaker 4: as a credit to your debt. So the government has
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  Speaker 4: said that this move is going to prevent and I
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  Speaker 4: say in quotation marks prevent growth in debt outpacing wages
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  Speaker 4: in the future, which I think is really honestly, it's
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  Speaker 4: a very smart way to do it, because I think
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  Speaker 4: the inflation as they're predicting can in the future get
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  Speaker 4: out of hand again. And it was a pretty rude
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  Speaker 4: experience to go through last year. Right, So the changes
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  Speaker 4: are going to have to be passed by June one
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  Speaker 4: this year, so it's coming up very soon, so it
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  Speaker 4: will bring down this year's incoming jump so that we
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  Speaker 4: don't get slammed with having to pay CPI again. And
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  Speaker 4: it's going to undo last year's changes. So let's go
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  Speaker 4: to a quick break so you can absorb all of that,
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  Speaker 4: and then we'll jump into how much your debt is
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  Speaker 4: going to go down by? All Right, guys, we are
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  Speaker 4: back and I am on a little bit of a
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  Speaker 4: solo rant about HEX and help debat, which honestly, I'm
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  Speaker 4: just glad that everybody let me do this, like this
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  Speaker 4: is my time to shine.
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  Speaker 2: Guys.
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  Speaker 4: You let me talk about money on my own slave.
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  Speaker 4: I love this for us. But what you guys are
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  Speaker 4: here for is to actually know about your cash, So
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  Speaker 4: let's talk about that. So how much is your debt
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  Speaker 4: actually going to go down by? If you want to
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  Speaker 4: calculate this for your specific amount that you have in
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  Speaker 4: your HEX or your help debt, you can check out
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  Speaker 4: the Government help estimator.
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  Speaker 2: There's going to be a link in our show notes
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  Speaker 2: and you can google it. But here are some figures.
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  Speaker 4: So if you had a HEX or help debt on
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  Speaker 4: June thirty, twenty twenty three, so last year. This is
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  Speaker 4: the total estimated credit for twenty twenty three and twenty
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  Speaker 4: twenty four, or part of twenty twenty four. So if
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  Speaker 4: you had a fifteen thousand dollar help debt, you'll get
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  Speaker 4: a credit of six hundred and seventy dollars. If you
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  Speaker 4: jump up to twenty five thousand, you would get a
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  Speaker 4: credit of eleven hundred and twenty dollars, thirty five thousand,
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  Speaker 4: you'd get a credit of fifteen hundred and seventy dollars,
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  Speaker 4: And if you had a help debt of forty five
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  Speaker 4: thousand dollars, you would get a credit of two thousand
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  Speaker 4: and twenty dollars, which at this point in time, I
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  Speaker 4: feel like so many people in our She's on the
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  Speaker 4: money community are sitting around that fifty thousand dollars like
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  Speaker 4: hex slash help debt range, because we're all just getting
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  Speaker 4: out of UNI and we haven't had time to smash
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  Speaker 4: it out. So aragon two grand as a refund is
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  Speaker 4: a pretty nice sum. I mean, in a perfect world,
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  Speaker 4: we wouldn't have to pay anything, right, but this is
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  Speaker 4: not that perfect world, and they do slam us with
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  Speaker 4: some indexation but what I need you to keep in
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  Speaker 4: mind is that your credit amount is actually going to
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  Speaker 4: vary based on your individual circumstances, including the repayments that
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  Speaker 4: you made during the year. So all help debts the
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  Speaker 4: indexed in twenty twenty three are now still subject to
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  Speaker 4: indexation on the first of June twenty twenty four, and
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  Speaker 4: you'll receive your indexation credit. However, if you did not
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  Speaker 4: incur indexation, you'll not receive the credit. And I know
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  Speaker 4: that that sounds silly to say, because it makes sense.
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  Speaker 4: I feel like that math maths. But a lot of
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  Speaker 4: people are now asking the question of, well, Victoria, I
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  Speaker 4: paid off my HEX debt to avoid indexation completely because
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  Speaker 4: you know, maybe you wanted to increase your serviceability on
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  Speaker 4: a home loan, or it was just giving you anxiety,
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  Speaker 4: or you didn't feel comfortable with it.
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  Speaker 2: Will I receive a refund?
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  Speaker 4: And the answer to that is no, because if you
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  Speaker 4: didn't incur the indexation, that's what they're giving you refunds on.
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  Speaker 4: They're not going to give you a refund on a
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  Speaker 4: debt that you paid off that you didn't incur that
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  Speaker 4: indexation on, right, So I think that that sounds silly,
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  Speaker 4: but a lot of people are asking it, and it's
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  Speaker 4: not a silly question because this is a complex system
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  Speaker 4: that a lot of people are like, mate, I've never
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  Speaker 4: had to wrap my head around to this before, so
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  Speaker 4: don't feel like that's me going. Of course, you're not
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  Speaker 4: going to get a refund for something if you didn't
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  Speaker 4: spend the money. But next question here, how do I
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  Speaker 4: get that credit?
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  Speaker 1: Like?
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  Speaker 2: Do I have to apply for it?
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  Speaker 4: No, my friends, It's going to be automatically calculated by
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  Speaker 4: the ATO based on how much indexation you paid last year,
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  Speaker 4: and then that indexation credit is going to be applied
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  Speaker 4: to this year's help debt. It's not going to be
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  Speaker 4: a cash payment, but it will mean that at tax
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  Speaker 4: time it will appear on your tax refund. So if
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  Speaker 4: you're all up to date with the ATO and you've
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  Speaker 4: broken even, which, let's be honest, is the goal here.
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  Speaker 4: We don't want to owe tax and in a perfect world,
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  Speaker 4: according to the government, they don't want to owe you
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  Speaker 4: money either, so it's a break even situation. In that situation,
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  Speaker 4: you would end up with a credit and potentially as
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  Speaker 4: sneaky little tax refund, which would be very very nice.
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  Speaker 4: A lot of people have been asking me who is
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  Speaker 4: eligible for HELP or HEX Debt Assistant. So you're going
• 10:00
  Speaker 4: to be eligible if you had an outstanding debt that
• 10:03
  Speaker 4: was increased on last year or is set to be
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  Speaker 4: indexed this year. If you had debt indexed in both years,
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  Speaker 4: you're going to get a credit for both, which is
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  Speaker 4: a money win. And the relief is also going to
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  Speaker 4: be applied to apprentices with debts through the VET Student
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  Speaker 4: Loan Program or the Australian Apprenticeship Support Loans. So I
• 10:22
  Speaker 4: think that's important as well, just with dotting all our
• 10:25
  Speaker 4: eyes and crossing all our teas to make sure you
• 10:27
  Speaker 4: have all of the information. But as I said, if
• 10:30
  Speaker 4: you paid back your HEX debt last year, former students
• 10:33
  Speaker 4: who paid back their outstanding student loan between June the first,
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  Speaker 4: twenty twenty three and the time the new proposed legislation
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  Speaker 4: is passed, you're going to be eligible for a tax credit.
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  Speaker 2: So instead of getting that credit applied.
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  Speaker 4: To your loan debt, it's going to be put on
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  Speaker 4: your tax and the Department of Education they've come out
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  Speaker 4: and they've said that if your help Debt account balance
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  Speaker 4: is less than zero as a result of the reduction,
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  Speaker 4: you don't have to pay other primary tax or Commonwealth debts,
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  Speaker 4: and the credit will be refunded via the usual ATO
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  Speaker 4: refund mechanisms, which is basically your normal financial institution account
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  Speaker 4: recorded by the ATO, i e.
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  Speaker 2: Your bank account.
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  Speaker 4: So if you've met all of that criteria, yes you
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  Speaker 4: will get a refund in cash. But I think that
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  Speaker 4: for most people this is actually just going to be
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  Speaker 4: a credit that is applied to your HEX because a
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  Speaker 4: lot of us weren't actually able to extinguish the whole
• 11:29
  Speaker 4: amount of debt. That was an absolute privilege if you could,
• 11:32
  Speaker 4: but you weren't able to get rid of all of it.
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  Speaker 4: So it's going to act as a credit and they'll
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  Speaker 4: only pay you back if it goes negative, which kind
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  Speaker 4: of makes sense.
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  Speaker 2: Anyway. That's my rant over. I could go on and on.
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  Speaker 2: I've had fun. I hope you've had fun, and I
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  Speaker 2: hope you've learned.
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  Speaker 4: Something really quickly about you know, what's going on in
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  Speaker 4: this hex slash help landscape. I feel like the budget
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  Speaker 4: has made it a little bit confusing because there's so
• 11:54
  Speaker 4: much information out there at the moment. But I've loved
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  Speaker 4: having this chat with you. It was kind of one sided,
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  Speaker 4: so I do apologize for that, but I hope I've
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  Speaker 4: given you enough information to feel really empowered about making
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  Speaker 4: decisions around your help and your HEX.
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  Speaker 2: So, my friends, I'll see you later.
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  Speaker 4: The advice shared on She's on the Money is general
• 12:16
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• 12:20
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• 12:24
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• 12:27
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• 12:30
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