Hello, my name's Santasha Nabananga Bamblet. I'm a proud Yr the Order Kerni Whaltbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.

Hello, my name's Santasha Nabananga Bamblet. I'm a proud Yr the Order Kerni Whaltbury and a waddery woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on a wondery country, acknowledging the elders, the ancestors and the next generation coming through as this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow.

Let's get into it.

Let's get into it.

She's on the Money, She's on the Money.

She's on the Money, She's on the Money.

Hello, and welcome to She's on the Money, the podcast us that digs into finance news you actually care about in a way you can actually understand. I'm Victoria Devine, your finance friend with all the tea, and today I'm spilling on what's probably the juiciest headline of the year for anyone who's still feeling the very heavyweight of their hex or help debt. Today I'm going to be chatting with you about an Australian government proposal that could mean a twenty percent cut on your student loan balance, which sounds very very good, and let's be real, for most of us, that's not just news that's life changing. However, my friends, there is actually a lot to unpack here, from what these changes actually mean for your repayments to how they could affect your budget in the long run. So my friend, grab a coffee, sit tight, and let's break it down together. All right, So here's the lowdown on the HEX and Help changes. First, the headline graber a twenty percent reduction on all outstanding student loan balances if the Labor government is re elected. This is going to take effect on the first of June twenty twenty five and apply to everyone with a HEX or Help debt VET or similar student debt. Let's break down what that actually means with some numbers, though, because stats girl and we have done some maths. So first, a twenty percent debt reduction. Say you're an average oozy grad with a HEXDET of twenty seven thousand, six hundred dollars. Under this new plan, you're going to get twenty percent of that balance completely wiped out. So instead of owing twenty seven thousand, six hundred dollars, you'll see about five and a half grand raised from your debt. That brings your outstanding balance down to twenty two than one hundred dollars, which is not too shabby, right. Or Let's say you're getting through your repayments and you only have ten grand left on your HEX debt. You'll see a two thousand dollars reduction, dropping your total to eight grand. Now, let's sideline a little bit and have a quick chat about the higher repayment threshold that's been proposed. The next change is the repayment threshold, and that's the minimum amount you need to earn before HEX repat's stuck getting taken out of your pay It sounds good on the surface right right now, you start repaying your HEX stet once you're earning over fifty four, four hundred and thirty five dollars a year. But with this new plan, that threshold is going to rise to sixty seven thousand dollars. So let's go in with an example. Say you're a recent grad and you're making sixty grand a year. You're currently just above the threshold and would be paying a portion of your income towards your HEX SDET every single pay cycle. But under this new proposed system, you'll actually full blow the threshold and won't need to start paying back your HEX until you earn above sixty seven thousand dollars. That's extra cash in your pocket right now to help with rent and bills, or maybe even just saving up for a big goal, which sounds, as I said, on the surface, really good. I have a lot to say and it'll all make sense, but there are a few things that I want to get through before we dive into a deeper part of the conversation. So let's touch on the cost of living benefits really quickly. So what do these changes mean day to day? Of you're going to feel a little bit less pressure when it comes to rent and bills. But let's say you're making sixty five thousand dollars a year. Currently, you're going to be required to make X repayments, which are probably around two thousand dollars a year depending on your exact income bracket. With this new threshold, you'd get to keep that two grand in your pocket, and in today's economy, that cash could go towards your rising grocery bills or rent or saving up for your first home. But if you're earning just over that threshold stay sixty eight thousand dollars, your repayments will still be smaller than before thanks to the new twenty percent debt reduction, meaning that your overall balance and yearly repayments are reduced. Sounds kind of sexy, right these changes. They do come at a time when the cost of living it feels like it's squeezing us all. So for some this could be a really real relief. By bumping up this payment threshold, many of us would have a little bit more breathing room each month before our student debt started kicking in, and that twenty percent reduction, that'sands of dollars that you don't have to worry about anymore. But as with anything money related, it's really important to know the details so that you can decide the best way to approach your repayments in the long run. After the break, I'm going to deep dive into the nitty gritty of how these changes actually play out across different income levels. At first glance, lowering the minimum repayment sounds like a win for your budget, right, But there's a little bit more to the story. Stick around, because what seems like short term relief might actually have a few unexpected twists. All right, my friends, we are back and I'm excited to talk about this. It is time to get into the nitty gritty of how these changes actually play out across different income levels. At first glance, lowering the minimum repayment sounds great for your monthly budget. Everybody wants a little bit more wiggle room. But when you take a closer look, for a lot of people, it could mean holding onto that debt for much longer. Now, obviously, in true Victoria divine fashion, we have an entire spreadsheet. I'm going to dive into exactly what that looks like. Though. For incomes at the lower end of the scale, like sixty thousand dollars and seventy thousand dollars, the new minimum repayment requirement is either zero dollars or it's been significantly reduced, so for example, four hundred and fifty dollars annually for seventy thousand dollars a year. This reduction essentially delays repayment, especially for those earning sixty thousand dollars, where the debt theoretically would never be paid off under minimum payments alone. Previously, someone who earned seventy grand a year would have made an annual payment of seventeen hundred and fifty dollars, which would allow them to pay off their debt if they remained at that income level in about fifteen point eight years. Now, under this new proposal, the drastically reduced payment of four hundred and fifty dollars leads to an indefinite repayment timeline so forever, as it doesn't actually keep pace with the debt growth. Let me talk to my spreadsheet for a hot second. So let's pretend you have graduated, right, So if this comes into effect on the first of June twenty twenty five, you'll get your twenty percent reduction, which arguably is very exciting at this point in time, and then the new monthly minimum repayments will apply. Right. So we've done some maths in the background, and I have used the number of thirty thousand, seven hundred and sixty three dollars because that is the average textet of somebody in their twenties, right, So this number is what I'm always going to fall back on. As of the first of June twenty twenty five, if you get your twenty percent deposit, that will mean that your text stet drops to twenty four thousand, six hundred and ten dollars. That is now the number that I'm going to be talking about because that's your post twenty percent discount. Right. So historically, if you earned sixty thousand dollars, your old minimum and your repayment would have been six hundred bucks, right, And that means if you extrapolate that out, it would have taken you forty six years to pay that debt off. Okay, So now we go back to this sixty thousand dollars income. You now have twenty four thousand, six hundred and ten dollars. But because of the new minimum monthly repayment threshold, you no longer make any hextet repayments, which means, hypothetically, you're never going to pay off your hextet. Now, is that the worst thing in the entire world if you never plan on earning over sixty thousand dollars. Absolutely not. We do have to think of a few things here though. One, if you are ever going to get property, your hextet is ultimately going to reduce how much you're able to borrow. But also, on the bright side of things, a hex and help debt is the only type of debt in Australia that dies with you, So it's not going to be passed on to anybody else, it's not going to be taken out of your estate when you pass along. It is something that is going to just cease to exist at the end end of your life, which sounds a little bit morbid, but I think it's really important to preface it there too, because a lot of us get really stressed about the idea of carrying debt and then passing debt on. Right. Let's jump up though, because if you're on an income of seventy thousand dollars per annum, historically your old minimum repayment was seventeen hundred and fifty dollars a year, which means it would have taken you fifteen point seven seven years to pay off, which is, honestly, in the grand scheme of things, not that bad. However, your new minimum monthly repayment as of the first of June twenty twenty five will change to four hundred and fifty dollars per annum, which means you'll never pay off your hextet. You will literally be paying off your hex debt every single year. But because of the average rate of indexation, which I have used the number two point seven because that is the average rate of indexation historically. It means you're never going to pay off your debt, but you will be paying that debt off every single year. But because of the rate of indexation, you are actually going to recrue more debt each and every single year, even though you're paying off the minimum repayments. If we jump up to eighty thousand dollars a year, your old minimum repayment or as it is right now today is twenty eight hundred dollars a year, it means that in just under ten years, so nine point eight five years, you will be able to pay off the entirety of your hex stet. However, your new minimum monthly repayments as of the first of June twenty twenty five, will be nineteen hundred and fifty dollars, pushing your years to pay that debt off up to fifteen years and six months at the end of the day. This means that you are ultimately going to be paying more indexation over that period of time, and it is going to stay with you even longer. This obviously extrapolates out all the way up to incomes of one hundred and seventy nine nine hundred and ninety nine dollars, because anything above one hundred and eighty thousand dollars means that there will be absolutely no change. But I think you're starting to see my point. And my point is, even with a very attractive twenty percent discount and the fact that your minimum monthly repayments are dropping, it sounds all really good because we all want cash in our back pocket to spend on bills and rent. Like life is tough. Ultimately, this debt is either going to never be paid off under this new scheme, or it's going to take significantly longer, which is going to impact your ability to create wealth over the long term, which to me is the most concerning part of this, right because ultimately my job is to help you create wealth and keep wealth and put you in the best possible financial position. And I think there's been a lot in the media about this being super positive. Who doesn't want a twenty percent discount on their hecks. I know I'm going to welcome that, but that doesn't actually mean that you're in the best possible position. The other thing that slightly frustrates me is this is a one time discount, So right now, if you're at university or you're planning to start universe, you're not going to benefit from this at all. And those calculations that I used were based on that twenty four thousand figure, not the thirty plus thousand figure. It's going to take you even longer to pay off your debt with lower minimum repayments. So to summarize all of this, what does it all mean for those in lower and middle income brackets. The new system gives you arguably immediate relief by lowering repayments, which can help with current cost of living pressures. But on the flip side, sticking to these minimum repayments could mean carrying that debt for years longer than you might have under the old rules, and that doesn't sit well with me. Maybe the extra breathing room is exactly what you need right now, and it's not a bad thing to say. No, V, I don't even care about having this debt for longer. I need a little bit of wiggle room in my budget.

Hello, and welcome to She's on the Money, the podcast us that digs into finance news you actually care about in a way you can actually understand. I'm Victoria Devine, your finance friend with all the tea, and today I'm spilling on what's probably the juiciest headline of the year for anyone who's still feeling the very heavyweight of their hex or help debt. Today I'm going to be chatting with you about an Australian government proposal that could mean a twenty percent cut on your student loan balance, which sounds very very good, and let's be real, for most of us, that's not just news that's life changing. However, my friends, there is actually a lot to unpack here, from what these changes actually mean for your repayments to how they could affect your budget in the long run. So my friend, grab a coffee, sit tight, and let's break it down together. All right, So here's the lowdown on the HEX and Help changes. First, the headline graber a twenty percent reduction on all outstanding student loan balances if the Labor government is re elected. This is going to take effect on the first of June twenty twenty five and apply to everyone with a HEX or Help debt VET or similar student debt. Let's break down what that actually means with some numbers, though, because stats girl and we have done some maths. So first, a twenty percent debt reduction. Say you're an average oozy grad with a HEXDET of twenty seven thousand, six hundred dollars. Under this new plan, you're going to get twenty percent of that balance completely wiped out. So instead of owing twenty seven thousand, six hundred dollars, you'll see about five and a half grand raised from your debt. That brings your outstanding balance down to twenty two than one hundred dollars, which is not too shabby, right. Or Let's say you're getting through your repayments and you only have ten grand left on your HEX debt. You'll see a two thousand dollars reduction, dropping your total to eight grand. Now, let's sideline a little bit and have a quick chat about the higher repayment threshold that's been proposed. The next change is the repayment threshold, and that's the minimum amount you need to earn before HEX repat's stuck getting taken out of your pay It sounds good on the surface right right now, you start repaying your HEX stet once you're earning over fifty four, four hundred and thirty five dollars a year. But with this new plan, that threshold is going to rise to sixty seven thousand dollars. So let's go in with an example. Say you're a recent grad and you're making sixty grand a year. You're currently just above the threshold and would be paying a portion of your income towards your HEX SDET every single pay cycle. But under this new proposed system, you'll actually full blow the threshold and won't need to start paying back your HEX until you earn above sixty seven thousand dollars. That's extra cash in your pocket right now to help with rent and bills, or maybe even just saving up for a big goal, which sounds, as I said, on the surface, really good. I have a lot to say and it'll all make sense, but there are a few things that I want to get through before we dive into a deeper part of the conversation. So let's touch on the cost of living benefits really quickly. So what do these changes mean day to day? Of you're going to feel a little bit less pressure when it comes to rent and bills. But let's say you're making sixty five thousand dollars a year. Currently, you're going to be required to make X repayments, which are probably around two thousand dollars a year depending on your exact income bracket. With this new threshold, you'd get to keep that two grand in your pocket, and in today's economy, that cash could go towards your rising grocery bills or rent or saving up for your first home. But if you're earning just over that threshold stay sixty eight thousand dollars, your repayments will still be smaller than before thanks to the new twenty percent debt reduction, meaning that your overall balance and yearly repayments are reduced. Sounds kind of sexy, right these changes. They do come at a time when the cost of living it feels like it's squeezing us all. So for some this could be a really real relief. By bumping up this payment threshold, many of us would have a little bit more breathing room each month before our student debt started kicking in, and that twenty percent reduction, that'sands of dollars that you don't have to worry about anymore. But as with anything money related, it's really important to know the details so that you can decide the best way to approach your repayments in the long run. After the break, I'm going to deep dive into the nitty gritty of how these changes actually play out across different income levels. At first glance, lowering the minimum repayment sounds like a win for your budget, right, But there's a little bit more to the story. Stick around, because what seems like short term relief might actually have a few unexpected twists. All right, my friends, we are back and I'm excited to talk about this. It is time to get into the nitty gritty of how these changes actually play out across different income levels. At first glance, lowering the minimum repayment sounds great for your monthly budget. Everybody wants a little bit more wiggle room. But when you take a closer look, for a lot of people, it could mean holding onto that debt for much longer. Now, obviously, in true Victoria divine fashion, we have an entire spreadsheet. I'm going to dive into exactly what that looks like. Though. For incomes at the lower end of the scale, like sixty thousand dollars and seventy thousand dollars, the new minimum repayment requirement is either zero dollars or it's been significantly reduced, so for example, four hundred and fifty dollars annually for seventy thousand dollars a year. This reduction essentially delays repayment, especially for those earning sixty thousand dollars, where the debt theoretically would never be paid off under minimum payments alone. Previously, someone who earned seventy grand a year would have made an annual payment of seventeen hundred and fifty dollars, which would allow them to pay off their debt if they remained at that income level in about fifteen point eight years. Now, under this new proposal, the drastically reduced payment of four hundred and fifty dollars leads to an indefinite repayment timeline so forever, as it doesn't actually keep pace with the debt growth. Let me talk to my spreadsheet for a hot second. So let's pretend you have graduated, right, So if this comes into effect on the first of June twenty twenty five, you'll get your twenty percent reduction, which arguably is very exciting at this point in time, and then the new monthly minimum repayments will apply. Right. So we've done some maths in the background, and I have used the number of thirty thousand, seven hundred and sixty three dollars because that is the average textet of somebody in their twenties, right, So this number is what I'm always going to fall back on. As of the first of June twenty twenty five, if you get your twenty percent deposit, that will mean that your text stet drops to twenty four thousand, six hundred and ten dollars. That is now the number that I'm going to be talking about because that's your post twenty percent discount. Right. So historically, if you earned sixty thousand dollars, your old minimum and your repayment would have been six hundred bucks, right, And that means if you extrapolate that out, it would have taken you forty six years to pay that debt off. Okay, So now we go back to this sixty thousand dollars income. You now have twenty four thousand, six hundred and ten dollars. But because of the new minimum monthly repayment threshold, you no longer make any hextet repayments, which means, hypothetically, you're never going to pay off your hextet. Now, is that the worst thing in the entire world if you never plan on earning over sixty thousand dollars. Absolutely not. We do have to think of a few things here though. One, if you are ever going to get property, your hextet is ultimately going to reduce how much you're able to borrow. But also, on the bright side of things, a hex and help debt is the only type of debt in Australia that dies with you, So it's not going to be passed on to anybody else, it's not going to be taken out of your estate when you pass along. It is something that is going to just cease to exist at the end end of your life, which sounds a little bit morbid, but I think it's really important to preface it there too, because a lot of us get really stressed about the idea of carrying debt and then passing debt on. Right. Let's jump up though, because if you're on an income of seventy thousand dollars per annum, historically your old minimum repayment was seventeen hundred and fifty dollars a year, which means it would have taken you fifteen point seven seven years to pay off, which is, honestly, in the grand scheme of things, not that bad. However, your new minimum monthly repayment as of the first of June twenty twenty five will change to four hundred and fifty dollars per annum, which means you'll never pay off your hextet. You will literally be paying off your hex debt every single year. But because of the average rate of indexation, which I have used the number two point seven because that is the average rate of indexation historically. It means you're never going to pay off your debt, but you will be paying that debt off every single year. But because of the rate of indexation, you are actually going to recrue more debt each and every single year, even though you're paying off the minimum repayments. If we jump up to eighty thousand dollars a year, your old minimum repayment or as it is right now today is twenty eight hundred dollars a year, it means that in just under ten years, so nine point eight five years, you will be able to pay off the entirety of your hex stet. However, your new minimum monthly repayments as of the first of June twenty twenty five, will be nineteen hundred and fifty dollars, pushing your years to pay that debt off up to fifteen years and six months at the end of the day. This means that you are ultimately going to be paying more indexation over that period of time, and it is going to stay with you even longer. This obviously extrapolates out all the way up to incomes of one hundred and seventy nine nine hundred and ninety nine dollars, because anything above one hundred and eighty thousand dollars means that there will be absolutely no change. But I think you're starting to see my point. And my point is, even with a very attractive twenty percent discount and the fact that your minimum monthly repayments are dropping, it sounds all really good because we all want cash in our back pocket to spend on bills and rent. Like life is tough. Ultimately, this debt is either going to never be paid off under this new scheme, or it's going to take significantly longer, which is going to impact your ability to create wealth over the long term, which to me is the most concerning part of this, right because ultimately my job is to help you create wealth and keep wealth and put you in the best possible financial position. And I think there's been a lot in the media about this being super positive. Who doesn't want a twenty percent discount on their hecks. I know I'm going to welcome that, but that doesn't actually mean that you're in the best possible position. The other thing that slightly frustrates me is this is a one time discount, So right now, if you're at university or you're planning to start universe, you're not going to benefit from this at all. And those calculations that I used were based on that twenty four thousand figure, not the thirty plus thousand figure. It's going to take you even longer to pay off your debt with lower minimum repayments. So to summarize all of this, what does it all mean for those in lower and middle income brackets. The new system gives you arguably immediate relief by lowering repayments, which can help with current cost of living pressures. But on the flip side, sticking to these minimum repayments could mean carrying that debt for years longer than you might have under the old rules, and that doesn't sit well with me. Maybe the extra breathing room is exactly what you need right now, and it's not a bad thing to say. No, V, I don't even care about having this debt for longer. I need a little bit of wiggle room in my budget.

Go.

Go.

I get it, I really do, and that's great. But if you're thinking long term, you might decide to chip away at that debt a bit faster to free yourself up sooner. It all depends on what your values are and what you're working towards. Importantly, you need to remember that this isn't a one size fits all solution. It's about understanding how these changes impact you personally and making a choice that aligns with your own goals and values. And over the last week my dms have absolutely blown up with people going V, I'd love to see the stats. V. I'd love to see the numbers. V. This doesn't sit with me. Well, I know the idea of a twenty percent discount is really good, but what does this mean for me holding debt for longer? You went wrong. I've done the numbers and it does put you in a worse off wealth position in the long term. When we posted about the news on Instagram on the She's on the Money account, a lot of you were really quick to ask why the new rate of indexation that was announced hasn't been applied yet, and fair enough because it's super confusing. But here's the down low. While the government announced that they're lower the indexation rate, the actual legislation and mayke it official hasn't been passed through parliament. Yet that means that right now the old indexation rate is still in effect and we're all waiting for that fine stamp of approval. If it does pass, the ATO will apply that low or rate retroactively, and anyone eligible could see a credit or a refund, which is kind of attractive. So hang tight and we'll keep you updated as things develop. She's on the Money we are all about giving you the tools to take control even when changes come flying at you. If you found my breakdown helpful, please be sure to subscribe. I am literally here to make the money stuff easy for you, and I want to say that I want to make it fun along the way, But right now this doesn't feel that fun. So I hope you have a beautiful weekend. If you have any questions, always slide into our DMS. And if you've listened this far, I'm going to upload the spreadsheet of all of my working out to the website so you can download it and have a little bit of a snoop see you later, guys. Did By shared on She's on the Money is generally nature and does not consider your individual circumstances. She's on the Money exists surely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS TMD and obtain appropriate financial advice tailored towards your needs. Victoria Divine and Sheese on the Money are authorized representatives of Money. Sheper Pty Ltd a BN three two one six, four nine two seven seven zero eight AFSL four five one two eight nine

I get it, I really do, and that's great. But if you're thinking long term, you might decide to chip away at that debt a bit faster to free yourself up sooner. It all depends on what your values are and what you're working towards. Importantly, you need to remember that this isn't a one size fits all solution. It's about understanding how these changes impact you personally and making a choice that aligns with your own goals and values. And over the last week my dms have absolutely blown up with people going V, I'd love to see the stats. V. I'd love to see the numbers. V. This doesn't sit with me. Well, I know the idea of a twenty percent discount is really good, but what does this mean for me holding debt for longer? You went wrong. I've done the numbers and it does put you in a worse off wealth position in the long term. When we posted about the news on Instagram on the She's on the Money account, a lot of you were really quick to ask why the new rate of indexation that was announced hasn't been applied yet, and fair enough because it's super confusing. But here's the down low. While the government announced that they're lower the indexation rate, the actual legislation and mayke it official hasn't been passed through parliament. Yet that means that right now the old indexation rate is still in effect and we're all waiting for that fine stamp of approval. If it does pass, the ATO will apply that low or rate retroactively, and anyone eligible could see a credit or a refund, which is kind of attractive. So hang tight and we'll keep you updated as things develop. She's on the Money we are all about giving you the tools to take control even when changes come flying at you. If you found my breakdown helpful, please be sure to subscribe. I am literally here to make the money stuff easy for you, and I want to say that I want to make it fun along the way, But right now this doesn't feel that fun. So I hope you have a beautiful weekend. If you have any questions, always slide into our DMS. And if you've listened this far, I'm going to upload the spreadsheet of all of my working out to the website so you can download it and have a little bit of a snoop see you later, guys. Did By shared on She's on the Money is generally nature and does not consider your individual circumstances. She's on the Money exists surely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS TMD and obtain appropriate financial advice tailored towards your needs. Victoria Divine and Sheese on the Money are authorized representatives of Money. Sheper Pty Ltd a BN three two one six, four nine two seven seven zero eight AFSL four five one two eight nine