Money magazine Comments - Ask Paul: Should I pay off my daughter's $40k HECS debt? Melinda's daughter is saving for a studio, but she owes $40,000 in HECS and $15,000 on her car. Does Paul Clitheroe think Melinda should help pay the debt? https://www.moneymag.com.au/feed/latest?story=179796630 Wed, 07 Sep 2022 11:22:36 +1000 Wed, 07 Sep 2022 11:22:36 +1000 en-AU Copyright 2026 Money magazine 5 Money magazine Comments - Ask Paul: Should I pay off my daughter's $40k HECS debt? https://media.moneymag.com.au/prod/media/library/Money_Mag/Logo/Logo_401x133.png Comment by Money magazine ()

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]]> Money magazine () Wed, 07 Sep 2022 11:22:36 +1000 Comment by Irene Tsang ()

Why some parents want to help their children - for example buy their first home, when their children still not afford to? Why Melinda's daughter cannot stay home? But choose to pay $350.0 per week rent? Do she knows that she can save money instead of renting, for the deposit of her first home. Nowadays we spoil our kid too much. If they haven't been go down that road to save, you just give, give and give; they will never know how to value what they got.

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]]> Irene Tsang () Wed, 07 Sep 2022 17:06:58 +1000 Comment by silas j ()

Maybe Melinda's daughter doesn't live in the same city or town. She could have moved away to study or get a job. Pretty narrow-minded to assume everyone can stay living with their parents until their 30s.

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]]> silas j () Wed, 07 Sep 2022 17:15:59 +1000 Comment by Abre G ()

Definitely prioritise other debt ahead of a HECS/HELP debt.

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]]> Abre G () Wed, 12 Oct 2022 08:50:22 +1100 Comment by Virginia H ()

In 2024 Paul's advice is outdated now that indexation on HECS debts has been implemented. Melinda's daughter's debt will be indexed at 7.1% in line with CPI in 2023. That means that her $40K debt has risen to $42,8K and the value will keep increasing year on year by CPI whether payments are made or not made. Let's say in 2024 CPI is 5%. Melinda's debt will grow from $42.8K to $44.9K. This is about to become an insidious, hidden problem for many with HECS debts who believe they are living in interest free territory. This is now one of the worst debts to carry on this basis. Some may look at their HECS debt in 5 years time only to learn that their $40K original debt is now a balance owing of $50K due to indexation. Pay HECS debts off sooner rather than later. Pay it off today.

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]]> Virginia H () Sat, 09 Mar 2024 16:56:04 +1100