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5 Aussies reveal sacrifices made to pay off HECS debt early: 'Worked 230 extra hours'

The threat of indexation spurred these young Aussies to clear their student loans as quickly as possible.

Millions of already-pressed Australians with HECS/HELP student loan debt are about to be dealt another blow as their student debts are increased again. So, Yahoo Finance spoke to five Aussies to learn about the sacrifices they made to free themselves of the debt.

In 2023, indexation added a whopping 7.1 per cent to loan balances and in what feels like a blink of an eye, we’re just two months away from the next round of indexation on June 1, which will add a sum in line with inflation to student loan debts.

Until last year, this had sat around 2 per cent. But 2023’s indexation was the highest since 1990 and its timing was less than ideal for young Aussies struggling with wage stagnation, rising rents and an iron-clad housing market on which they’re firmly on the outer.


Research at the time revealed 14 per cent of borrowers didn’t think they’d ever pay off their student loan, and more than half were “slightly” or “extremely concerned” about their ability to repay.

For some, however, indexation has spurred them into action to get their debt gone as fast as possible. Here are their stories.

Steph: ‘We were initially considering them as debts that would die with us’

Steph and her husband accrued $50,000 of student debt between them, which they’d been chipping away at through compulsory employer-deducted repayments.

The pair paid off $8,500 as a lump sum when they bought a property as part of an interstate move for work, clearing her husband’s debt. They now plan to pay off the remaining $14,700 in May this year, ahead of indexation.

HECS story illustrated with close-up image of a young woman looking at the camera.
HECS was at the top of Steph's list to wipe after last year's indexation. (Supplied)

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Mortgage broker Maddie Walton, says making manual lump-sum payments in May can reduce the amount your indexation is calculated at.

“Indexation is applied [on June 1] to your previous HECS balance from last financial year,” she explains. “This means all of your repayments you made from July 2023 to now are not considered when the government applies indexation on June 1, 2024.”

After copping $1,400 in indexation last year, Steph wants the debt gone as soon as possible. She is funding the final payment “entirely by overtime hours” and has clocked 230 extra hours in the past year to pay it back in bulk.

“Theoretically, it'd be gone in two years if I just let it be and did compulsory repayments,” she said. “[But] indexation feels like lost money.”

Lawrence: ‘I missed out on Schoolies but graduated with only $4,000 of debt’

Lawrence paid off $45,000 from a double degree mostly while studying, and graduated with only $4,000 left on his balance. He cleared this within a year.

A young man looking to the left of the camera
Lawrence said his accountant parents taught him a lot about money management. (Supplied)

Describing himself as “extremely frugal”, Lawrence lived at home with his parents and helped care for his grandmother throughout his studies.

“I never bought a car and I also missed out on Schoolies because I landed a part-time job at an engineering firm,” he said.

Also by Emma Edwards:

“I was fortunate that my parents provided a lot for me [while living at home],” he said. “Once I graduated and started on a full-time salary, I was still living at home with family so I saved 90 per cent of my salary and paid off the last HECS amount before indexation.”

Paying off HECS was Lawrence’s second financial priority after investing in stocks, citing that his parents were both accountants and that he “learnt a lot from them about money management.”

Ella: ‘My whole wage is now going into my pocket!’

Ella graduated with $15,000 of HECS debt, which rose to $18,000 during a period of time when she was travelling and not making repayments. It wasn’t until she began saving for a home that her attention turned to HECS.

“I wanted to have no debt,” she said. “I was prioritising saving for a deposit, [and] had never focused on paying my HECS.”

Ella did, however, make a couple of smaller manual contributions whenever she came into extra money, such as an annual leave payout when leaving a job.

It was the 2023 round of indexation that made Ella want to clear the balance once and for all. Her compulsory repayments through her employer would have been enough to clear the debt before the new financial year but, upon hearing indexation would apply to her balance from the year prior, Ella spun into action.

“I decided to work out what 7 per cent indexation would be, and pay that amount out of my savings before the indexation date.”

Ella described herself as having “always been a good saver”, which meant she found it easier to smash down her debt without missing out. “I'm lucky that I've had a steadily increasing income since graduating,” she said.

“It's been nice with the rising cost of living this financial year to know that my whole wage is now going into my pocket,” she said.

Maddie explains that high indexation rates have made people “more aware of their HECS balance and how it’s increasing, year on year.” In her mortgage broking practice, she is starting to see people pay it off faster.

Gabbie: ‘I paid $6k out of my savings buffer’

Gabbie’s arts degree saw her take on $23,000 worth of debt, which she started paying off before she was finished, thanks to taking on a permanent role during her studies.

She recently cleared the remaining $6,000 on her student loan to avoid indexation.

A young woman looks into the camera
Gabbie was still able to secure a home loan despite her HECS debt. (Supplied)

But paying off her HECS wasn’t initially a priority.

“I bought my first property with my partner,” she said. “HECS didn’t impact our borrowing power to an extent that it was an issue for us, so we chose not to pay it off and make the most of the deposit we’d saved.”

Maddie explains that it’s your HECS repayments, not your balance, that affects how much you can borrow. “HECS repayments are calculated based on your income, and your repayments increase the more you earn.

What are the HECS repayment income thresholds and rates?

Repayment Income

Repayment rate

Below $51,550


$51,550 - $59,518


$59,519 - $63,089


$63,090 - $66,875


$66,876 - $70,888


$70,889 - $75,140


$75,141 - $79,649


$79,650 - $84,429


$84,430 - $89,494


$89,495 - $94,865


$94,866 - $100,557


$100,558 - $106,590


$106,591 - $112,985


$112,986 - $119,764


$119,765 - $126,950


$126,951 - $134,568


$134,569 - $142,642


$142,643 - $151,200


$151,201 and above


“This reduces the disposable income you have available to put towards a mortgage repayment, which is the driver for borrowing capacity.”

For some, this means using a portion of their deposit to clear their debt can free up a lot more borrowing power.

Maddie notes that, as in Gabbie’s case, it’s not always necessary to pay down your HECS before getting a mortgage. It may be advisable to get into the property market sooner, before paying down your HECS. Speaking to a broker can help you understand how your student loan stacks up against your home-buying plans.

Massimo: ‘Remember to tell your employer to stop taking HECS out of your pay!’

Having completed an undergraduate degree, honours and a loading for studying abroad, Massimo faced $36,000 of student loan debt.

However, COVID lockdowns meant he amassed some savings and had very little to spend it on. He paid the bulk of his debt off in 2021 and 2022 with savings, and then cleared the final $10,000 with income from full-time work in 2023.

A man holding a chicken smiles at the camera
Massimo received a surprise windfall after paying off his HECS debt early. (Supplied)

Massimo warns others paying off their HECS early to tell their employer to stop taking the repayments out of their salary.

“I had to get a refund in my last tax return as there were four-five months of payments taken out of my salary once the debt was cleared,” he said.

Good to know!