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Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud Yr

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Speaker 1: the Order Kerni Whaltbury and a waddery woman. And before

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Speaker 1: we get started on She's on the Money podcast, I

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Speaker 1: would like to acknowledge the traditional custodians of the land

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Speaker 1: of which this podcast is recorded on a wondery country,

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Speaker 1: acknowledging the elders, the ancestors and the next generation coming

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Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing

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Speaker 1: and the storytelling of you to make a difference for

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Speaker 1: today and lasting impact for tomorrow.

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Speaker 2: Let's get into it.

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Speaker 3: She's on the Money, She's on the Money.

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Speaker 4: Hello, and welcome to She's on the Money, the podcast

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Speaker 4: us that digs into finance news you actually care about

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Speaker 4: in a way you can actually understand. I'm Victoria Devine,

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Speaker 4: your finance friend with all the tea, and today I'm

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Speaker 4: spilling on what's probably the juiciest headline of the year

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Speaker 4: for anyone who's still feeling the very heavyweight of their

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Speaker 4: hex or help debt. Today I'm going to be chatting

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Speaker 4: with you about an Australian government proposal that could mean

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Speaker 4: a twenty percent cut on your student loan balance, which

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Speaker 4: sounds very very good, and let's be real, for most of.

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Speaker 2: Us, that's not just new, that's life changing.

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Speaker 4: However, my friends, there is actually a lot to unpack here,

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Speaker 4: from what these changes actually mean for your repayments to

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Speaker 4: how they could affect your budget in the long run.

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Speaker 4: So my friend, grab a coffee, sit tight, and let's

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Speaker 4: break it down together. All right, So here's the lowdown

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Speaker 4: on the HEX and Help changes. First, the headline graber

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Speaker 4: a twenty percent reduction on all outstanding student loan balances

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Speaker 4: if the Labor government is re elected. This is going

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Speaker 4: to take effect on the first of June twenty twenty

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Speaker 4: five and apply to everyone with a HEX or Help

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Speaker 4: debt VET or similar student debt. Let's break down what

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Speaker 4: that actually means with some numbers, though, because stats girl

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Speaker 4: and we have done some maths. So first, a twenty

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Speaker 4: percent debt reduction. Say you're an average oozy grad with

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Speaker 4: a HEXDET of twenty seven thousand, six hundred dollars. Under

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Speaker 4: this new plan, you're going to get twenty percent of

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Speaker 4: that balance completely wiped out. So instead of owing twenty

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Speaker 4: seven thousand, six hundred dollars, you'll see about five and

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Speaker 4: a half grand raised from your debt. That brings your

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Speaker 4: outstanding balance down to twenty two than one hundred dollars,

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Speaker 4: which is not too.

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Speaker 2: Shabby, right.

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Speaker 4: Or Let's say you're getting through your repayments and you

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Speaker 4: only have ten grand left on your HEX debt. You'll

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Speaker 4: see a two thousand dollars reduction, dropping your total to

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Speaker 4: eight grand. Now, let's sideline a little bit and have

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Speaker 4: a quick chat about the higher repayment threshold that's been proposed.

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Speaker 4: The next change is the repayment threshold, and that's the

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Speaker 4: minimum amount you need to earn before HEX repat's stuck

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Speaker 4: getting taken out of your pay It sounds good on

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Speaker 4: the surface right right now, you start repaying your HEX

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Speaker 4: stet once you're earning over fifty four, four hundred and

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Speaker 4: thirty five dollars a year. But with this new plan,

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Speaker 4: that threshold is going to rise to sixty seven thousand dollars.

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Speaker 4: So let's go in with an example. Say you're a

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Speaker 4: recent grad and you're making sixty grand a year. You're

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Speaker 4: currently just above the threshold and would be paying a

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Speaker 4: portion of your income towards your HEX SDET every single

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Speaker 4: pay cycle. But under this new proposed system, you'll actually

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Speaker 4: full blow the threshold and won't need to start paying

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Speaker 4: back your HEX until you earn above sixty seven thousand dollars.

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Speaker 4: That's extra cash in your pocket right now to help

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Speaker 4: with rent and bills, or maybe even just saving up

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Speaker 4: for a big goal, which sounds, as I said, on.

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Speaker 2: The surface, really good.

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Speaker 4: I have a lot to say and it'll all make sense,

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Speaker 4: but there are a few things that I want to

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Speaker 4: get through before we dive into a deeper part of

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Speaker 4: the conversation.

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Speaker 2: So let's touch on the cost.

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Speaker 4: Of living benefits really quickly. So what do these changes

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Speaker 4: mean day to day? Of you're going to feel a

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Speaker 4: little bit less pressure when it comes to rent and bills.

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Speaker 4: But let's say you're making sixty five thousand dollars a year. Currently,

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Speaker 4: you're going to be required to make X repayments, which

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Speaker 4: are probably around two thousand dollars a year depending on

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Speaker 4: your exact income bracket. With this new threshold, you'd get

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Speaker 4: to keep that two grand in your pocket, and in

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Speaker 4: today's economy, that cash could go towards your rising grocery

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Speaker 4: bills or rent or saving.

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Speaker 2: Up for your first home.

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Speaker 4: But if you're earning just over that threshold stay sixty

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Speaker 4: eight thousand dollars, your repayments will still be smaller than

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Speaker 4: before thanks to the new twenty percent debt reduction, meaning

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Speaker 4: that your overall balance and yearly repayments are reduced. Sounds

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Speaker 4: kind of sexy, right these changes. They do come at

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Speaker 4: a time when the cost of living it feels like

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Speaker 4: it's squeezing us all. So for some this could be

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Speaker 4: a really real relief. By bumping up this payment threshold,

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Speaker 4: many of us would have a little bit more breathing

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Speaker 4: room each month before our student debt started kicking in,

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Speaker 4: and that twenty percent reduction, that'sands of dollars that you

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Speaker 4: don't have to worry about anymore. But as with anything

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Speaker 4: money related, it's really important to know the details so

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Speaker 4: that you can decide the best way to approach your

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Speaker 4: repayments in the long run. After the break, I'm going

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Speaker 4: to deep dive into the nitty gritty of how these

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Speaker 4: changes actually play out across different income levels. At first glance,

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Speaker 4: lowering the minimum repayment sounds like a win for your budget, right,

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Speaker 4: But there's a little bit more to the story.

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Speaker 2: Stick around, because.

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Speaker 4: What seems like short term relief might actually have a

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Speaker 4: few unexpected twists. All right, my friends, we are back

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Speaker 4: and I'm excited to talk about this. It is time

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Speaker 4: to get into the nitty gritty of how these changes

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Speaker 4: actually play out across different income levels. At first glance,

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Speaker 4: lowering the minimum repayment sounds great for your monthly budget.

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Speaker 4: Everybody wants a.

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Speaker 2: Little bit more wiggle room.

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Speaker 4: But when you take a closer look, for a lot

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Speaker 4: of people, it could mean holding onto that debt for

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Speaker 4: much longer. Now, obviously, in true Victoria divine fashion, we

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Speaker 4: have an entire spreadsheet. I'm going to dive into exactly

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Speaker 4: what that looks like.

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Speaker 2: Though.

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Speaker 4: For incomes at the lower end of the scale, like

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Speaker 4: sixty thousand dollars and seventy thousand dollars, the new minimum

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Speaker 4: repayment requirement is either zero dollars or it's been significantly reduced,

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Speaker 4: so for example, four hundred and fifty dollars annually for

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Speaker 4: seventy thousand dollars a year. This reduction essentially delays repayment,

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Speaker 4: especially for those earning sixty thousand dollars, where the debt

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Speaker 4: theoretically would never be paid off under minimum payments alone. Previously,

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Speaker 4: someone who earned seventy grand a year, would have made

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Speaker 4: an annual payment of seventeen hundred and fifty dollars, which

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Speaker 4: would allow them to pay off their debt if they

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Speaker 4: remained at that income level in about fifteen point eight years. Now,

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Speaker 4: under this new proposal, the drastically reduced payment of four

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Speaker 4: hundred and fifty dollars leads to an indefinite repayment timeline

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Speaker 4: so forever, as it doesn't actually keep pace with the

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Speaker 4: debt growth. Let me talk to my spreadsheet for a

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Speaker 4: hot second. So let's pretend you have graduated, right, So

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Speaker 4: if this comes into effect on the first of June

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Speaker 4: twenty twenty five, you'll get your twenty percent reduction, which

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Speaker 4: arguably is very exciting at this point in time, and

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Speaker 4: then the new monthly minimum repayments will apply.

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Speaker 2: Right.

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Speaker 4: So we've done some maths in the background, and I

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Speaker 4: have used the number of thirty thousand, seven hundred and

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Speaker 4: sixty three dollars because that is the average textet of

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Speaker 4: somebody in their twenties, right, So this number is what

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Speaker 4: I'm always going to fall back on. As of the

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Speaker 4: first of June twenty twenty five, if you get your

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Speaker 4: twenty percent deposit, that will mean that your texttet drops

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Speaker 4: to twenty four thousand, six hundred and ten dollars.

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Speaker 2: That is now the number that I'm going.

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Speaker 4: To be talking about because that's your post twenty percent discount. Right.

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Speaker 4: So historically, if you earned sixty thousand dollars, your old

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Speaker 4: minimum and your repayment would have been six hundred bucks, right,

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Speaker 4: And that means if you extrapolate that out, it would

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Speaker 4: have taken you forty six years to pay that debt off. Okay,

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Speaker 4: So now we go back to this sixty thousand dollars income.

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Speaker 4: You now have twenty four thousand, six hundred and ten dollars.

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Speaker 4: But because of the new minimum monthly repayment threshold, you

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Speaker 4: no longer make any hextet repayments, which means, hypothetically you're

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Speaker 4: never going to pay off your hextet. Now, is that

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Speaker 4: the worst thing in the entire world if you never

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Speaker 4: plan on earning over sixty thousand dollars.

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Speaker 2: Absolutely not.

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Speaker 4: We do have to think of a few things here though. One,

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Speaker 4: if you are ever going to get property, your hextet

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Speaker 4: is ultimately going to reduce how much you're able to borrow.

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Speaker 4: But also, on the bright side of things, a hex

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Speaker 4: and help debt is the only type of debt in

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Speaker 4: Australia that dies with you, So it's not going to

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Speaker 4: be passed on to anybody else, it's not going to

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Speaker 4: be taken out of your estate when you pass along.

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Speaker 4: It is something that is going to just cease to

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Speaker 4: exist at the end end of your life, which sounds

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Speaker 4: a little bit morbid, but I think it's really important

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Speaker 4: to preface it there too, because a lot of us

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Speaker 4: get really stressed about the idea of carrying debt and

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Speaker 4: then passing debt on.

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Speaker 2: Right.

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Speaker 4: Let's jump up though, because if you're on an income

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Speaker 4: of seventy thousand dollars per annum, historically your old minimum

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Speaker 4: repayment was seventeen hundred and fifty dollars a year, which

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Speaker 4: means it would have taken you fifteen point seven seven

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Speaker 4: years to pay off, which is, honestly, in the grand

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Speaker 4: scheme of things, not that bad. However, your new minimum

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Speaker 4: monthly repayment as of the first of June twenty twenty

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Speaker 4: five will change to four hundred and fifty dollars per annum,

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Speaker 4: which means you'll never pay off your hextet. You will

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Speaker 4: literally be paying off your hex debt every single year.

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Speaker 4: But because of the average rate of indexation, which I

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Speaker 4: have used the number two point seven because that is

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Speaker 4: the average rate of indexation historically.

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Speaker 2: It means you're never going.

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Speaker 4: To pay off your debt, but you will be paying

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Speaker 4: that debt off every single year. But because of the

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Speaker 4: rate of indexation, you are actually going to recrue more

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Speaker 4: debt each and every single year, even though you're paying

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Speaker 4: off the minimum repayments. If we jump up to eighty

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Speaker 4: thousand dollars a year, your old minimum repayment or as

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Speaker 4: it is right now today is twenty eight hundred dollars

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Speaker 4: a year, it means that in just under ten years,

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Speaker 4: so nine point eight five years, you will be able

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Speaker 4: to pay off the entirety of your hex stet. However,

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Speaker 4: your new minimum monthly repayments as of the first of

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Speaker 4: June twenty twenty five, will be nineteen hundred and fifty dollars,

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Speaker 4: pushing your years to pay that debt off up to

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Speaker 4: fifteen years and six months at the end of the day.

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Speaker 4: This means that you are ultimately going to be paying

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Speaker 4: more indexation over that period of time, and it is

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Speaker 4: going to stay with you even longer. This obviously extrapolates

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Speaker 4: out all the way up to incomes of one hundred

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Speaker 4: and seventy nine nine hundred and ninety nine dollars, because

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Speaker 4: anything above one hundred and eighty thousand dollars means that

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Speaker 4: there will be absolutely no change. But I think you're

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Speaker 4: starting to see my point. And my point is, even

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Speaker 4: with a very attractive twenty percent discount and the fact

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Speaker 4: that your minimum monthly repayments are dropping, it sounds all

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Speaker 4: really good because we all want cash in our back

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Speaker 4: pocket to spend on bills and rent.

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Speaker 2: Like life is tough.

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Speaker 4: Ultimately, this debt is either going to never be paid

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Speaker 4: off under this new scheme, or it's going to take

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Speaker 4: significantly longer, which is going to impact your ability to

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Speaker 4: create wealth over the long term, which to me is

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Speaker 4: the most concerning part of this, right because ultimately my

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Speaker 4: job is to help you create wealth and keep wealth

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Speaker 4: and put you in the best possible financial position. And

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Speaker 4: I think there's been a lot in the media about

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Speaker 4: this being super positive. Who doesn't want a twenty percent

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Speaker 4: discount on their hecks. I know I'm going to welcome that,

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Speaker 4: but that doesn't actually mean that you're in the best

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Speaker 4: possible position. The other thing that slightly frustrates me is

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Speaker 4: this is a one time discount, So right now, if

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Speaker 4: you're at university or you're planning to start universe, you're

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Speaker 4: not going to benefit from this at all. And those

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Speaker 4: calculations that I used were based on that twenty four

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Speaker 4: thousand figure, not the thirty plus thousand figure. It's going

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Speaker 4: to take you even longer to pay off your debt

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Speaker 4: with lower minimum repayments. So to summarize all of this,

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Speaker 4: what does it all mean for those in lower and

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Speaker 4: middle income brackets. The new system gives you arguably immediate

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Speaker 4: relief by lowering repayments, which can help with current cost

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Speaker 4: of living pressures.

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Speaker 2: But on the flip side.

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Speaker 4: Sticking to these minimum repayments could mean carrying that debt

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Speaker 4: for years longer than you might have under the old rules,

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Speaker 4: and that doesn't sit well with me. Maybe the extra

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Speaker 4: breathing room is exactly what you need right now, and

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Speaker 4: it's not a bad thing to say. No, V, I

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Speaker 4: don't even care about having this debt for longer. I

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Speaker 4: need a little bit of wiggle room in my budget.

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Speaker 1: Go.

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Speaker 4: I get it, I really do, and that's great. But

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Speaker 4: if you're thinking long term, you might decide to chip

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Speaker 4: away at that debt a.

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Speaker 2: Bit faster to free yourself up sooner.

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Speaker 4: It all depends on what your values are and what

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Speaker 4: you're working towards. Importantly, you need to remember that this

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Speaker 4: isn't a one size fits all solution. It's about understanding

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Speaker 4: how these changes impact you personally and making a choice

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Speaker 4: that aligns with your own goals and values. And over

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Speaker 4: the last week my dms have absolutely blown up with

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Speaker 4: people going V, I'd love to see the stats. V.

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Speaker 4: I'd love to see the numbers. V. This doesn't sit

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Speaker 4: with me. Well, I know the idea of a twenty

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Speaker 4: percent discount is really good, but what does this mean

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Speaker 4: for me holding debt for longer?

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Speaker 2: You went wrong.

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Speaker 4: I've done the numbers and it does put you in

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Speaker 4: a worse off wealth position in the long term. When

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Speaker 4: we posted about the news on Instagram on the She's

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Speaker 4: on the Money account, a lot of you were really

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Speaker 4: quick to ask why the new rate of indexation that

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Speaker 4: was announced hasn't been applied yet, and fair enough, because

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Speaker 4: it's super confusing.

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Speaker 2: But here's the down low.

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Speaker 4: While the government announced that they're lower the indexation rate,

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Speaker 4: the actual legislation and they g it official hasn't been

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Speaker 4: passed through parliament. Yet that means that right now the

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Speaker 4: old indexation rate is still in effect and we're all waiting.

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Speaker 2: For that fine stamp of approval.

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Speaker 4: If it does pass, the ATO will apply that low

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Speaker 4: or rate retroactively, and anyone eligible could see a credit

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Speaker 4: or a refund.

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Speaker 2: Which is kind of attractive.

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Speaker 4: So hang tight and we'll keep you updated as things develop.

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Speaker 4: She's on the Money we are all about giving you

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Speaker 4: the tools to take control even when changes come flying

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Speaker 4: at you. If you found my breakdown helpful, please be

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Speaker 4: sure to subscribe. I am literally here to make the

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Speaker 4: money stuff easy for you, and I want to say

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Speaker 4: that I want to make it fun along the way,

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Speaker 4: But right now this doesn't feel that fun. So I

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Speaker 4: hope you have a beautiful weekend. If you have any questions,

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Speaker 4: always slide into our DMS. And if you've listened this far,

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Speaker 4: I'm going to upload the spreadsheet of all of my

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Speaker 4: working out to the website so you can download it

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Speaker 4: and have a little bit of.

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Speaker 2: A snoop see you later, guys.

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Speaker 4: Did By shared on She's on the Money is generally

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Speaker 4: nature and does not consider your individual circumstances. She's on

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Speaker 4: the Money exists surely for educational purposes and should not

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Speaker 4: be relied upon to make an investment or financial decision.

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Speaker 2: If you do choose to buy a financial.

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Speaker 4: Product, read the PDS TMD and obtain appropriate financial advice

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Speaker 4: tailored towards your needs. Victoria Divine and Sheese on the

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Speaker 4: Money are authorized representatives of Money. Sheper Pty Ltd a

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Speaker 4: BN three two one six, four nine two seven seven

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Speaker 4: zero eight AFSL four five one two eight nine