Hello all,
Long story short, I finished uni in 2012, and I currently have a HECS/HELP debt of around $14-15,000.
For those who don't know, that's essentially government provided student loans for university here in Australia, and payments are only deducted once your income is above a certain level. I've recently started a new job which is above said level (my previous job was below the threshold). The balance is currently indexed at CPI (~2.5%), but will shift to the 10 year bond rate from 2016 (capped at 6%). I'd say if I leave things as they are about $3000 a year of my salary will go towards servicing the debt.
Essentially, I've got three options. I can pay the debt off as quickly as possible (I don't have all of that amount in savings yet, but should before the end of the year). I can pay it off via the tax system over the next couple of years and pay the balance off once the rate changes in 2016, or I can just continue paying it off as per normal.
I kinda think I can get a better rate investing the money in something else rather than repaying my low-interest HECS debt. At ~2.5%, I couldn't borrow money at that rate, and could get better returns from investments. Once the interest rate charged is changed, it might be more worthwhile to focus on paying it off.
For additional information, I am currently saving just over 50% of my post tax/post HELP salary. Given a few minor lifestyle changes I can get this towards 55% (60% with some more serious changes). I have no other debts.
What does everyone else think? Is my hair on fire?
Poll
