HECS-HELP and what your careers counsellor won't talk about

If you are making the transition from high school to university, Uni Notes can help!

If you asked the average Australia high-school student about their expected university fees and their country’s loan-scheme, you’d probably be met with a blank stare.

In fact, if you asked the average Australian university student about the same thing, that stare would be just as blank.

Even if you asked the average teacher about fees and the debt you’re about to take on, they would probably tell you “not to worry” and to “think about it later”.

That’s fair enough when you consider that their job is to ensure you study as hard as you can for your final exams.

However, given that we are nearly halfway through August and students all around the country are being asked to think about their university preferences, now would be a good time to start thinking about university fees, HECS-HELP, and the debt that will almost certainly be left over at the end of your degree.

Now, this is by no means the most important consideration, but it seems to be the most ignored. We’re told to “think of what you’d enjoy!” or to “think about what interests you most!” but it’s pretty rare that we’re told to think about the money.

It’s true that ‘thinking about the money’ might not even make a difference in our ultimate decision, but shouldn’t we be aware anyway? Isn’t it valuable to know exactly what system we’re entering ourselves into?

I think it is, so I’m going to explain to you what your careers counsellor won’t: what the HECS-HELP loan is, how much you’re going to pay for your degree, and how that might influence your university preferences.

Essentially, the HECS-HELP scheme is a subsidy on your university fees, as well as a loan to help you pay them. In fact, it’s almost certain to be the best loan you ever get in your life, because you’ll never be charged interest on your debt, and it will only increase to reflect minor changes in the Consumer Price Index.

Luckily, the subsidy offered by the HECS-HELP scheme is incredibly substantial. For someone one a HECS-HELP scheme, the average yearly contribution for an undergraduate Arts degree is $6,152, the average yearly contribution for an undergraduate Science degree is $8,768, and the average yearly contribution for an undergraduate Law degree is $10,266. You can view other degrees and their average yearly student contribution here.

Contrarily, a full-fee paying student, like an international student, could pay $30,000 a year for their degree. Your entire HECS-HELP supported course might cost you less than someone else’s full-fee degree payments for one year! Now is a good time to appreciate how lucky we are to be born in Australia.

Finally, you don’t even pay your HELP debt until you earn over the tax threshold. For the 2015-2016 period, the tax threshold is $54,126, meaning that you don’t pay back any of your debt (unless you volunteer to) if you earn less than $54,000.

In summary: the government pays for most of your degree, you take a loan to cover the rest of it, and then you pay it off once you earn a bit over $50,000 a year. It’s a pretty sweet deal!

After you earn at least one dollar over the threshold, you’ll start paying about $2,000 per year for your degree every year until the debt’s paid off. That’s 4% of your annual income, which is quite insignificant in the grand scheme of things, but something to make note of nonetheless! After all, that $2,000 a year will add up, and eventually you’d wish you were putting it towards your home loan instead of your HELP loan.

What does this mean for you?

Firstly, it means that you should probably opt for undergraduate degrees instead of full-fee placed postgraduate coursework degrees. For example, some people who want to do Law might think “Oh, I’m not sure… maybe I’ll do an undergraduate Arts degree and do postgraduate Law later on”. However, postgraduate degrees are often full-fee placed instead of a Commonwealth Supported Place (CSP) – i.e., a degree supported by HECS-HELP.

So, if you get the ATAR for an undergraduate degree, it could be better, at least from a financial standpoint, to accept that offer instead of pursuing the chance of a postgraduate coursework degree (unless the fees for the postgraduate degree are the same).

Secondly, it means you should do a degree you enjoy, and not a degree your parents want you to do. There are a lot of reasons people tell you to “do what you enjoy”, but one of the best reasons to do this is… well, who wants to pay $2,000 a year for over ten years for a degree you hated and didn’t want to do in the first place?

Thirdly, it means you should take uni seriously. Don’t go out and get smashed at the pub the night before your exam, because if you fail a subject, you’re still paying for it. And if you need to repeat the subject to complete the degree, then you’re paying for it twice.

Fourthly, it means that you should treat your degree like a serious investment.

Because it is.

It doesn’t necessarily need to be seen as a strict financial investment. You could be investing in your intellect or your own personal development, which shouldn’t be underestimated.

For others, they will treat their degree like a serious business decision and take a vocational course that they expect a financial return from.

Whichever camp you’re in, your degree is probably going to cost you at least $20,000, so you should treat it like it’s worth that much. Choose wisely, put thought into your degree, and once you’re in, be conscientious about getting the most out of your investment!

As a Year 12 student, you have some big decisions coming up in the next few months. If you need some help making them or have any questions, feel free to head over to the university section of the ATAR Notes forums. Everyone’s in the same boat as you and ready to offer their thoughts!