James Milburn is 25 years old and has spent close to two years saving up for a $20,000 deposit to buy his first home - a dream which has now been pushed back by years thanks to the recent indexing of HECS/HELP debt.
James’ borrowing power was reduced from $165,000 to $140,000 when taking his $15,000 debt into consideration - that’s a $25,000 difference.
“I spoke to a broker who said, ‘you pretty much need to double your debt and that's how much it limits you’, which is insane,” James said.
“My debt is not big by any stretch of the imagination and a lot of people have it worse. So, to think that what I consider to be a rather small debt is impacting my borrowing power so massively, it’s quite shocking.”
Also read: How your HECS-HELP debt will affect your tax
Property dreams put on hold
James said his dreams of home ownership had now been pushed back until 2025, and his main goal was to focus on paying off his student debt first to avoid further increases down the line.
“I have to factor in paying off my student debt before I even consider saving for a property. So that's at least another year and a half if I were to pay the whole thing off right now, which would put me in a position where I had no savings again,” he said.
“And then who knows where the property markets are going in that time? Prices could get a lot higher or get a lot lower, I don't know, but chances are it's going to get more expensive by then.
“So, then that's even more time on top of it that I need to save more to be able to afford something, because I need to factor in other costs associated with it, like stamp duty.”
How will the HECS/HELP rise impact me?
James is not the only Aussie who will find their property dreams have been impacted by the recent rise.
Research by Compare Club found the average graduate with a $22,000 debt would have had their borrowing capacity limited by around $15,000. For the average couple, that jumps to $21,500.
For a single person who has gone on to complete extended post-graduate studies with a $100,000 debt, they would have their borrowing capacity limited by $104,000.
HECS-HELP debt impact on borrowing capacity
Profile 1(Average Graduate)
Profile 2(Average Couple)
Profile 4(Single with 7 years extended studies)