I mentioned in my September monthly recap that I did my taxes for the year and received a refund. Along with that my accountant gave me more good news which was that I finished paying off my student loan. Yay!
To give you a brief insight on how the Australian student loan system (HECS) works, basically the government gives you a loan for your tertiary education at a very low interest rate. The interest rate is based on inflation so it is quite low, I say between 1 to 3 percent. To be honest I never really paid much attention to it, I just knew it was low.
You basically start paying off the loan after you start earning above a set threshold. This threshold has changed many times over the years, if I remember correctly the threshold when I started working full time was around $36,000 and it is now $54,869.
A percentage is deducted from your gross income in every pay cycle towards your loan. You don’t even realise it’s being deducted and you’re essentially paying off the loan in the background. At least that’s what it felt like for me. Every year after you lodge your taxes, the tax return statement specifies exactly how much you paid towards the loan.
My loan was $30,500 in the beginning for a bachelor and masters degree. I don’t know exactly how much I paid in interest as I misplaced some of my earlier statements.
I think it’s taken me about 10 years to pay it off. I could have paid it off sooner by making extra contributions but because it was automatically coming out of my salary and the interest wasn’t high, I just let it happen in the background. I’ve also had a mortgage for over 7 years so it made sense to me to put my money towards that instead.
Anyways, I am thrilled to have finally paid off my student loan!
Above all I am so grateful that the Australian government provides its citizens with an accessible way to get a tertiary education. This education has allowed me to build a career and gain knowledge that no one can ever take away from me. It is a great system and we are very lucky to have it and I really hope it stays for the future generations to come.