Getting through university is one thing, but then starting a low paying job with the huge burden of your HECS or HELP (Higher Education Loan Payment) debt on your shoulders can be deflating.

Having a HELP (or HECS) Loan is usually the largest financial burden on those straight out of tertiary education, who have not yet purchased a home.

Although at 2 – 3 per cent, the interest rate represents one of the lowest interest rate loans Australians will ever get, it is still money smart to get in early and pay down as much of your debt as you can.

According to the Australian Taxation Office the average Higher Education Loan Program debt in June 2010 was $13,617.  Your debt will grow each year, and the rules require that your repayments increase as your salary does.  These repayments range from 4 – 8 per cent of your salary.

Rather than be at the mercy of the Government as your salary increases, try to increase your payments towards your debt when you can.


Here are ten ways you can help yourself with your university debt:

  • Make sure your employer is aware of HECS/HELP debt.  Once you earn over the threshold amount (high $47,000s), you are expected to be automatically paying back your loan.  If not you are going to find yourself with a large bill from the taxman at tax time.
  • If you have other personal debt, such as credit card debt or a car loan, focus on these first, because they will usually have higher interest rates.
  • You can make extra voluntary payments.  Factor this into your weekly budget.  Any payments are a step in the right direction.
  • Voluntary repayments of $500 or more attract a 10 per cent bonus, meaning the Government will reduce your debt by $550 for a repayment of $500 and so on.
  • Saved up a lump sum or received a gift from your parents or an inheritance?  The government gives discounts of 5 and 10 per cent for lump sum payments.
  • If you have other personal debt, for example a car loan, focus on paying that down.  The interest rate will be higher.
  • Because voluntary repayments are indexed in your annual tax notice of assessment, the most efficient time to make a voluntary repayment (or pay off your debt) is just before indexation on 1 June each year.
  • If you have the cash to pay off your debt, the most efficient time to do it is just before the end of the financial year.