Should I pay off my uni HECS/HELP debt?


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Matt: I'm 23-year-old engineering graduate from Hobart in my first position out of university. I earn $68,000pa plus super and have almost $10,000 in super. I have $35,000 savings and a $33,000 HECS/HELP debt.

What is your advice in regard to a young graduate's immediate future?

Do I take advantage of the government's voluntary repayment contribution on HECS and HELP debts before the end of the year and pay it off all at once, or should I be a little more relaxed and be looking at investing? If so, where?


Paul: My view on HECS and HELP debt is that it is likely to be the cheapest loan you will ever have.

My general advice is to allow the extra tax taken out of your salary to pay that down over time and invest your money.

I believe you will earn more on your savings and investments than the benefit you get from paying off HECS and HELP debt.

Equally, money you build up in your own name is yours to use.

This may be for investment, buying a home or even starting your own business.

HECS and HELP debt is very low cost, so paying it off more quickly would not be my priority.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.