Should I pay off my HECS debt early?

HECS has been a great way for many Australians to fund their degree and not worry about paying anything upfront.

And unlike most debts, HECS debts do not attract an interest rate and instead, an indexation rate is applied to the loan every year which takes into account inflation and changes to cost if living.

The rate of indexation has been around the 2% mark for most of the last decade, however, it is expected that the rate will increase to 7.1% after June this year.

This will mean that for most Australians with an outstanding HECS debt, their balances will increase by hundreds or thousands of dollars.

So, the question we suggest people with an outstanding HECS debt should be asking themselves is whether its worth making an extra contribution(s) and pay off your debt faster.

This all comes down to personal circumstances and goals for the short, medium, and longer term.

Something to consider is that debts like HECS, personal loans, credit cards and car loans reduce the amount you could typically borrow to buy a property.

To make a voluntary contribution to your HECS loan, simply visit the Australian Tax Office (ATO) through the myGov website or app. And payments can be made through BPAY or with a credit card.

If you would like to talk about your HECS debt further, please reach out.

Have a wonderful week.