The government's lazy accounting is costing students thousands of dollars over the lifetime of their HELP debt. There's an easy fix, but the major parties just don't want to do it. It means people are being punished for doing the right thing.
Subscribe now for unlimited access.
or signup to continue reading
Think about a home loan. Interest is based on what you owe the bank. So when you make payments, you owe less and your interest goes down. But what if the bank held onto your repayments for a whole year before taking them off the mortgage? And they're still charging you interest the whole time.
If banks did that, you'd think it was a ripoff. So why do it to people with student debt?
When graduates make HELP debt repayments, these payments aren't counted before interest is applied. Your debt keeps growing even while you're paying it off.
It's a bit ironic that Labor recently announced changes so HELP debts won't stop graduates from getting a home loan. This was an overdue and necessary change. Not only can HELP loans be a barrier to a home loan, but they can also severely reduce your borrowing capacity.
Labor is happy to make sure graduates with HELP loans can get home loans. But they don't want HELP loans to work the same way as a home loan. It's clear as mud.
A graduate on an average income is paying around $2000 more than they should be. That's $2000 more than if the interest was calculated after their repayments were deducted first.
That's money that should be in your pocket but instead, it's in the government's back pocket.
More and more young people are delaying going to university, or putting it off entirely, because of HELP debts. That was me when I was 18. I dreamed about going to university and studying nursing.
I didn't end up going. I never even applied. I would've had to move away from home and I knew my family couldn't afford it. I don't want this to be anyone else's story. Young people shouldn't give up on their dreams because they're scared of debt.
The government can fix this problem right now. All they have to do is count people's payments before charging interest. It's that easy.
There's already promises flying from the major parties about the changes they'll make to the HELP debt system.
But it doesn't matter what changes they make if the system is set up to fail people.
It's your money. Your payments should count.
- Tammy Tyrrell is an independent senator for Tasmania.
