Ruby Bisson expects to live her entire life in debt and a new rule passed by the government on Thursday has made her situation even more untenable.
The 28-year-old Sydneysider is one of millions around the country who attended university and is now stuck paying back her HECS-HELP loan.
From Thursday, June 1, anyone who has an outstanding HECS loan will be slammed with a 7.1 per cent increase, which is the biggest increase in three decades.
Although HECS loans are interest-free, they are indexed to inflation. And amid the cost of living crisis, they have now jumped by an extraordinary amount as inflation runs rampant.
Analysis from the National Union of Students (NUS) found that the total value of HECS loans will increase by $4.5 billion as a result of the change, with the average debt projected to increase by $1700.
The NUS is calling for a freeze on HECS indexation to allow another solution to be put in place, while also saying the move is “unfair” as it claims the government will profit $2.5 billion off students and graduates this year alone.
So concerned was Ms Bisson about her rising HECS debt that the uni graduate, who has a $54,000 loan from three different fields of study, paid $10,000 last week to pay down her loan.
Unfortunately, she had little in the way of savings and had to dip into an account supposed to go towards a home deposit so that she can one day escape being a renter.
“7.1 per cent is higher than what I could get on a savings account,” Ms Bisson lamented to news.com.au.
From 2017 to 2021 when inflation was low, the rate of indexation averaged an ultra low 1.52 per cent.
But last year the indexation rate jumped up to 3.9 per cent. On Thursday it jumped again, by a whopping 7.1 per cent.
Repayments of HECS start at one per cent of your income if you earn between $48,361 and $55,836, and increase to 10 per cent of income above $141,848 per annum.
Ms Bisson suggested increasing the amount for when repayments kick in at the same time HECS debts increased, especially as wage growth is lagging behind the inflation rate.
As a contractor, her income is always uncertain and even after paying off a large chunk part of the debt, she reckons she will be lucky to be debt-free by retirement.
“My HECS (amount) is almost double my super,” she added in a touch of irony.
The added downside is that her battle to buy her own property has been delayed by at least a year, if not longer, from putting $10,000 in.
“It’s definitely set me back a year at least, I was almost ready to have those conversations with mortgage brokers,” she explained.
“It’s the emotional setback as well, you think you’re getting ahead and you’re not.”
Ms Bisson studied a Bachelor of Arts and ended up working as a freelancer and then started her own communications agency in Sydney’s south.
She wanted to upskill and enrolled into a Masters of Public Policy, before dropping out as she found “the costs outweighed the benefits”, with most classes over Zoom and with limited face-to-face learning.
She also started a Masters of Teaching hoping to change careers. However, she was unable to find a way to fund herself during the six weeks of full-time unpaid practical training and had to drop out of that too.
“I couldn’t find the way for those six weeks but I would have loved to have been qualified,” she said.
This left her with tens of thousands of dollars in debt.
Ms Bisson is part of a growing trend with no choice but to give up on education due to economic concerns.
In another blow, Ms Bisson opted not to have a graduation ceremony because she wanted to save up for the occasion once she completed her Masters. This ended up never eventuating.
Jane Body has worked in not-for-profits since graduating university a decade ago, including in Tanzania, and so for many years she did not make above the $48,361 threshold.
This meant she only recently started paying back her HECS.
As a result, the NSW resident, from Coffs Harbour in the state’s Mid North Coast, is now facing the prospect of having a HECS debt larger than when she left uni 10 years ago thanks to the indexation.
She studied a bachelor of international relations and politics, then later did a Masters of Business Administration
“At the beginning of this year, moved into a higher paying job as a result of doing that second degree,” Ms Body said.
“I thought this year was going to be the year I might make a dent but that isn’t going to be the case.”
Her debt was $78,000 before Thursday. But with the indexation kicking in, it now sits at $84,000, an increase of $6000.
“Every year it’s going to go up too,” she pointed out.
Ms Body now works at an advocacy not-for-profit called Think Forward, an organisation adding its voice to the calls to freeze the onerous indexation.
It’s going to lead to a “less educated country” she said, with less people opting for tertiary education, which “for the long term is not a good thing”.
NUS National President Bailey Riley was also critical of the government’s large indexation, saying in a statement: “We are already looking at becoming the most indebted generation in Australia‘s history and now the Federal Government is looking to profit from young Australians during a cost of living crisis”.