HECS HELP Student Debt: Should You Pay It Off or Invest Instead? with Jess Brady 

If you've ever stared at your HECS-HELP debt and thought, “Should I just pay this off now or use that money to invest instead?” this episode is for you.

In this juicy and jargon-free chat, Molly sits down with financial adviser and podcast host Jess Brady to unpack everything you need to know about your student loan (aka HECS or HELP) in 2025. With indexation rates changing and cost of living pressures rising, it’s no wonder more Aussies are wondering if this debt deserves more attention.

💥 Here’s what you’ll learn:

• What HECS-HELP debt actually is and how it’s calculated

• Why indexation (that sneaky thing that feels like ‘interest’) can make your debt grow even when you’re making repayments

• The new changes to HECS indexation and how they might help you

• When you start paying it back (and how much you'll need to repay based on your income)

• Whether paying it off early is a smart move -or if your money could work harder for you elsewhere (like investing in shares, saving for a home, or boosting your super)

• How your HECS debt could impact your home loan borrowing power

• Strategies for paying it off smarter (especially if you’re a high-income earner or living overseas)

• Tips on weighing up paying off debt vs investing, and how to align your strategy with your goals

Jess also shares real-world examples, a little tough love, and a few clever hacks to help you make the best decision for your future self -whether you want to be debt-free ASAP or grow your wealth over time.

🧠 Whether you're planning to buy a home, go back to study, move overseas or just want to feel more in control of your finances, this episode breaks it all down.

🏡 Looking to buy your first property?
Check out our Buyer Ready Bootcamp: https://www.ladiesfinanceclub.com/buyer-ready-2025

CHAPTERS

00:00 – Welcome back to Get Rich
00:22 – What is HECS/HELP debt, and how does it work?
01:44 – Why is it still called HECS, and who has it?
02:19 – When do you start repaying HECS? (2025 thresholds explained)
03:30 – What is indexation and how is it calculated?
04:49 – New changes to indexation (CPI vs WPI) and backdating
06:26 – The sneaky way indexation gets applied – and why it's controversial
07:57 – Molly’s experience paying off HECS after living overseas
08:52 – Pros and cons of paying off HECS early
09:58 – Does HECS affect your borrowing power when getting a mortgage?
10:54 – Should you focus on HECS or save for a deposit?
11:30 – Should you hold off extra payments and pay in a lump sum?
12:41 – Using a high-interest savings account as a strategy
13:06 – Should you invest instead of paying off HECS?
14:07 – Finding balance between priorities: investing, HECS, savings
15:01 – Where to find Jess Brady’s podcast and programs
15:56 – Final thoughts and wrap-up

LINKS AND RESOURCES FROM THE EPISODE

HECS Repayment Thresholds & Info (ATO): https://www.ato.gov.au/individuals-and-families/study-and-training-support-loans/compulsory-repayments
Financially Fierce Podcast: https://open.spotify.com/show/3vPcmjZFq3lhyEzPAGLFVO

CONNECT WITH JESS BRADY

Website: https://courses.jessicabrady.com.au/
Instagram: jessbrady_financialadvice
LinkedIn: https://www.linkedin.com/in/jessica-brady-21165812/
Facebook: https://www.facebook.com/profile.php?id=61552351622335

CONNECT WITH LADIES FINANCE CLUB

Join our free Facebook group - Ladies Finance Club Money Chat
Website: https://www.ladiesfinanceclub.com/
Instagram: https://www.instagram.com/ladiesfinanceclub/
LinkedIn: https://www.linkedin.com/company/ladies-finance-club/

TAKEAWAYS

• HECS is essentially a student loan that many graduates have.
• Repayment of HECS debt starts when income exceeds a certain threshold.
• Indexation rates have increased significantly, affecting debt levels.
• Paying off HECS early can free individuals from growing debt but may impact savings.
• HECS debt can affect borrowing capacity for property purchases.
• Consider your financial priorities when deciding how to manage HECS payments.
• Investing may yield better returns than paying off HECS, depending on the situation.
• Emergency savings should be prioritized before tackling HECS debt.
• Understanding the calculation of HECS is crucial for managing repayments.
• Resources like podcasts can provide further insights into financial management.

SOUND BITES

"What is HECS?"
"Returns are never guaranteed."
"It's called financially fierce."

TRANSCRIPT

[00:00:00] Molly: Hey, we're back with another episode of Get Rich, the podcast helping you do just that. Get rich and stay rich. If you've got like a hecs or help debt, you've probably wondered, should I pay it off asap or am I better off investing that money instead? And with recent changes to indexation wage thresholds and the impact on borrowing power, the hex game has changed.

[00:00:22] In case you need a quick refresher. Hecs Help is a loan from the Australian government that you can use to pay your student contribution amount. But how you manage it can make a big difference to your future. So today I'm joined again by the awesome Jess Brady financial advisor and founder of The Greenhouse, who is here to break it all down.

[00:00:40] So if you ever felt confused about Hecs or you just. Have ignored it all together. This episode is for you and of course if you're loving the podcast, we would love it if you would hit that subscribe button or even, ah, write us a review. Yeah, we would love that too. I hope you enjoy this epi. I. Alright, we have got Jess Brady back from the greenhouse and she's gonna be chatting with us about how Hecs works.

[00:01:06] So Jess, we get a lot of questions from people all about Hecs. How's it calculated? Should they be prioritizing paying it off first? Or you know, is it gonna affect them getting a mortgage? So I thought, I know you do some great content on your Instagram and our guys. I'll put in the show notes how you can.

[00:01:24] Find Jess on Instagram, but I thought let's have a conversation about hex slash help depending on your state and where you're from. Mm-hmm. Mm-hmm. So I thought we could just start with kind of what is hex. Is everyone aware? Are most people aware if they have a HX debt?

[00:01:42] Jess: So I think technically it is help debt.

[00:01:44] We've just never, I think we've all just collectively decided, no, we've known it as hex for long enough. We're keeping that effectively. What it is is a student loan. Why we don't just make things I. What they actually are. And we like to create more confusion and jargon. I really do not know.

[00:01:57] Molly: Just think about it as a let's another acronym, which has nothing to do, right?

[00:02:01] They get

[00:02:01] Jess: like higher education loan, something rather. Probably payments, I don't know. But no one ever knows because all we just think about is, oh yeah, that's our student debt. So if you've been to university and you didn't pay upfront, it is very likely unless you got a scholarship, that you have a HX debt.

[00:02:17] Awesome. And when

[00:02:19] Molly: do we start repaying

[00:02:20] Jess: that HX debt? So it's a somewhat controversial question, and that's because of the timing. So we are in Jan 2025 when we're recording this. So currently if you own less than 50. 4,000, I don't know, 400 bucks, somewhere around there. You actually don't need to make any repayments on your hex.

[00:02:40] Now, why I'm saying it's controversial is because 2025, let's all just take a deep breath and brace ourselves for an election year. We're now starting to see election promises, and one of them from Albo and the team is that if he gets in, he's gonna change how the bands work. So depending on when you're listening to this, I would always recommend with anything when it comes to money, go and check and see what the latest.

[00:03:00] Info is, but currently as at Gen 2025, if you're earning less than 54,400 and something, you are not required to make any repayments. Now, as your income increases the percentage that you will need to pay. Back increases all the way to like nearly 160,000, I think about 10%. Mm-hmm. Of your income needs to be paid.

[00:03:21] Right.

[00:03:22] Molly: Okay. Awesome. And how does it get calculated? Because I know, is it the indexation that it is, that's the interest you pay? How

[00:03:30] Jess: does that all work? So the reason that I think there's been so much chatter around hex, which frankly, you know, I've been giving advice, financial advice for a very, really long time.

[00:03:41] No one gave two hoots about hex debt years ago because inflation was so low. Um, it was like the least of anyone's dramas or issues Now. Over the last few years though, through the cost of living crisis that we've all enjoyed, inflation has gone up and therefore people have been smacked with a really high indexation amount on their hex debt.

[00:04:01] And for the first time ever, people are starting to go, oh my God, what the hell is going on? In fact, I've been making repayments all year, and not only have I not gone forward. Meaning that I've paid off more debt, my debt has swollen. So to combat that, there have been changes to how they calculate hex. So the new way is, again, just to add some more acronyms in, to confuse everyone.

[00:04:23] It's either CPI, the Consumer Price Index, or WPI, the wage price Index, whichever is the lower. So what they're trying to figure out is. Of each year, which is gonna give you the lower amount, and that's what they're going to use. Now, this is gonna be backdated, so it is likely that you're gonna be a little bit further ahead because any amounts that need to be credited will come off your H debt.

[00:04:49] If you've already paid your H debt off during that period, you're likely to get a refund. There's a calculator online where you can figure that out, but I think it does present. A really interesting opportunity for people to start thinking about, okay, based on my income threshold, based on the average indexation or applied rate to hex, am I just going around in circles here?

[00:05:10] Because the other quite average thing that they do, in my humble opinion, is they make you pay hex all year long. You'll probably see it come outta your bank account, and yet they don't apply the indexation until. The end of the year as if you haven't made any of those repayments. It's

[00:05:29] Molly: wild. It's wild. So what you're creating, you're still paying interest every month, even though you're actually pay, and then they just don't charge you at the end.

[00:05:36] Jess: That's dodgy. It's dodgy. It's dodgy. And so what I want people to think about and look, this obviously needs to be taken in the broader context of your life. Like if you've got no emergency savings, you've got your credit card, that's up to your eyeballs. Like you need to prioritize, you know, things that are gonna help you sleep at night and give you some financial wiggle room.

[00:05:53] But if you are on an income threshold, let's say you are earning like 65,000 and you're only paying 2% of your income back, but on average you can see that the last few years of indexation that's been applied has been over that. Then what that practically means is your hex debt is growing every year.

[00:06:09] And so that might be something that you are alarmed by and think, okay, well I don't wanna stay in hex debt forever. Maybe I need to do something to increase. How much I'm contributing so that I'm not going around in this loop like I Molly. When we run the world, we'll obviously do things quite differently.

[00:06:26] I really feel like there needs to be a couple of very, very big changes. There needs to be an indexation freeze, especially for people who haven't reached that income, man. Yeah. So if you're earning less than 54,000, you are not paying, you're not legally obliged or you're not required to pay any of it back.

[00:06:41] Some people see that as like, great, amazing. I'll deal with that later. And when later comes, they're like, oh my God, how come my debt has swollen and grown so much? It's because you're still getting indexation. It's compounding the wrong way. We want, we want compounding in our investments. We don't want compounding on debt.

[00:06:57] Molly: Yeah, I experienced this when I was overseas for five years. 'cause they hadn't bought in. You have to pay off your 'cause now it's changed, so you still have to pay it off even if you're working overseas. But when I was working overseas I didn't. So when I came back I had to work really hard to pay that off for asap.

[00:07:12] Especially like, I think, was it 2023? Like index was at like 7.1%. Always like super high.

[00:07:19] Jess: Yes. So it was a wildly high rate, but they, what they've done as part of that sort of remediation, if you will, so they're backdating it. So it was 7.1. They're reducing that down to 3.2. Yeah. Okay, awesome. Yes, yes. But people felt that 7.1, and again, that was the trigger where people were like.

[00:07:37] Oh, I maybe need to take this whole thing a little bit more seriously than I have in the past. Yeah.

[00:07:42] Molly: Oh, I think I was like that too. I was like, oh, this is like, you know, you kind of think of it as a meh. It'll just get paid off when it gets paid off, but when it's increasing, you're like, what? Yeah. So you wanna maybe definitely put a little bit of spare cash towards that.

[00:07:57] Alright, so we've. Talked about how it's calculated. So obviously the pros of paying off your hex is, you know, you're avoiding that index and you know, for some people they just like to be debt free. What about some of the cons of paying it off early? Are

[00:08:11] Jess: there, are there any cons? I mean. Yes, there's always trade offs with any financial decision you make.

[00:08:18] There's potential benefits and there's potential trade offs and and pitfalls. So practically, if you decide, nah, I'm really hell bent on being debt free with this student loan, then what you need to think about is, okay, well, is that gonna mean that I don't have as much money in my savings account? Does that mean that I don't have any surplus to start investing or build, I don't know, a fund to go on holidays or buy a property in the future or whatever?

[00:08:41] It's, so we're always trying to figure out. At what cost? Yeah. And is that trade off an appropriate one for me? Now? I feel like the natural one that I get asked about, and I know you probably get asked about it as well, is around a property. Yes. And does it affect how much you can borrow such a conundrum?

[00:09:00] So to answer really simply, yes it does. So whenever a bank is gonna lend you money, they wanna know more about you. Hey, who are you? What do you earn? What do you owe? Who are you financially dependent for? Yeah. Does that make sense? Dependent for, I don't even know. Who are your dependents? Independent. Yeah.

[00:09:17] Who's reliant on you? Who dependent on you? Oh God. We got there. And so of course if you've got any type of debt, the banks wanna know about it, and that's gonna reduce the amount that you can borrow. Now here's the conundrum. If you've got a hex debt and you really wanna buy a property, the trade off I think you're making is, do I go with a bigger deposit?

[00:09:35] And keep money in my property goal account and just slowly pay off my hex, knowing that it's gonna mean that the bank is gonna lend me less or do I go with a lower deposit, really focus on getting down my debt and have a higher amount that will be loaned to me. Now, there's obviously a few cascading questions off the back of that.

[00:09:58] Particularly if you're someone who has, say, someone who could go guarantor for you. Yeah. So if you have someone who can go guarantor for you, so you don't necessarily need as much in cash for a deposit, then obviously the priority for most people is, okay, great. Then how can I make sure that I'm normally borrowing as much as I can?

[00:10:17] What I would honestly want you to think through is if you don't have a deposit, you're borrowing a larger amount. That can be quite a shock. To the system. So like test that out to make sure you can actually live, yeah. With your sanity to do that. But like I think that that is worth thinking through. If you don't have anyone to go guarantor, like this is at the point where I'd say go and get a good mortgage broker.

[00:10:35] Get them to scenario test everything for you, and then you're in the best possible position to figure out what to do. Now the other thing. That I feel is quite important to note, and this is a personality style sort of concept, and I think you have to be honest about yourself and, and who are you right now, not who is the aspirational version of you that you are working towards becoming.

[00:10:54] Yeah, because Hex doesn't get applied until, let's call it the end of the financial year, may, June, et cetera. Sometimes people wanna keep their options flexible, and so rather than making additional repayments, they wanna keep it in their bank account. And at the end of the financial year, they might do it.

[00:11:11] As one big deposit, you obviously need to make sure you allow enough time. For it to be re received by the A TO, but it just gives you a little bit more wiggle room if you are not a hundred percent sure on your strategy. However, if you're the type of person where you know you're gonna open your bank account, see it and be tempted to spend it or go on a holiday or buy the bag, this strategy is not for you.

[00:11:30] Molly: Yeah, and I guess as well, Jess, and obviously this is not financial advice, but as far as having that money in a high interest savings account that you are holding there, that you're not looking at not touching, the money's just going in, would that be another kind of strategy to be so instead of sending that money off every month, at least then you are making a little bit of return on it?

[00:11:50] Jess: Yeah, I mean, I always think about setting up systems and automations to try to like safeguard you from you and so. Yes. Like, um, you can't see my Facebook. I'm like, yeah, yeah. Like if you are a number cruncher, sure you could do the numbers and be like, yes. Especially because as I said, like the hex doesn't get, the repayments that you make don't get applied until the end of financial year, the financial year, and they're gonna charge you indexation on the full amount, which is.

[00:12:15] Dodgy, as we've already said. So yeah, you could hack it. You could get a high interest savings account, you could get that interest for the year. Again, just come back to, am I the type of person that's then gonna look at that at the end of the financial year and be like, Ooh, do I really wanna pay it off that boring hex, or do I wanna go and do something fun with it?

[00:12:31] Yes. And practically am I actually going to remember. To do it. So I think there's just some hygiene and honesty sort of, yeah. Things to think about there. Yeah. Love

[00:12:41] Molly: it. And then just the last question on Hex that we get a lot is, are you better off, again, very similar I guess, to the home loan. Are you better off investing that money in the share market?

[00:12:52] You know, making a seven to 10% return verse, putting it. Into your he where you might make, you know, might be paying four to seven. So I guess this one's around people always like, well with the math, what works better?

[00:13:06] Jess: I mean, returns are never guaranteed. Exactly. Yeah. And we just need to kind of keep that in mind.

[00:13:10] Mm-hmm. And when we had. An indexation amount of like 7%. There was a real risk of like, okay, well we're taking on a lot of risk by investing this for potentially not that much Alpha or investment, you know, outperformance to an amount of money that we know we're gonna be charged. 'cause we know what current inflation rates are.

[00:13:28] However, now we've got this way of being able to be assessed either on. CPI or the wage price index, depending on which is lower, I think it does then make investing more attractive because if you look at historical long-term returns for growth or high growth portfolios, we are looking at a significantly higher average annual return than say, three or 4%.

[00:13:50] But again, come back to what's your goal. What's really important to you? What does it actually like? A lot of people think that they can only do one thing. It's like, Jess, tell me the one thing that's gonna like turn my life around. I'm like, if only there was just one thing. Yeah. And so if, if you have a few priorities, which most people do.

[00:14:07] Is there a nice tension point where you aren't giving up any of them, but none of them are at a hundred percent. So maybe it's unrealistic if you're spreading your money way too thin. But if you've got three or four really key priorities, where is there that middle ground? So you maybe are investing some of that money, maybe paying some.

[00:14:26] Off your hex debt or boosting your super or doing whatever you wanna do. Obviously we have some like emergency things to think about first, and that is if you don't have emergency savings, must start there. Bad debt. I would always recommend you clear that before you even think about making additional repayments to hex super or starting to invest.

[00:14:43] But I think this comes back to like what do you wanna get done? What's important to you and what does making that decision mean for your other priorities? Yeah, absolutely

[00:14:52] Molly: love

[00:14:52] Jess: it.

[00:14:53] Molly: And guys, if you are listening to Jess and you're like, Ugh, she's so good. She's so great. I wanna hear more of Jess. Jess, you have your own podcast as well.

[00:15:01] Jess: They, lemme have my own podcast, Molly. It's wild. I'll just rant and rave about things. What's it with? You're amazing.

[00:15:06] Molly: So how can people find it and what is it called?

[00:15:09] Jess: You can find it wherever you get podcasts. I feel like that's how the professionals say it.

[00:15:12] Molly: That is how they say it. Where you, it's like when they do books, they're like, where

[00:15:16] Jess: all good bookstores will have this book.

[00:15:18] Yeah, exactly. It's called Financially Fierce. It is available on all of the podcast places and yeah, it's been going since March of 2024 and I'm always shocked, surprised, and delighted by how many people tune on in, send me dms on Instar and ask questions from, you know, topic episodes, which is awesome.

[00:15:37] Absolutely

[00:15:37] Molly: love it. We will put all the links in the show notes so they can check it out and also to Jess's program as well if you would like to check that out. But Jess, this has been an awesome chat. Thank you so much. I've learned a lot about Hex. There was a lot of info there I had no clue about. So thank you for coming on and sharing with our community.

[00:15:56] Always a pleasure to talk to you, Molly. Thank you for

[00:15:57] Jess: having me. Awesome.

KEYWORDS

HECS, student debt, repayment, indexation, financial advice, investing, property buying, budgeting, personal finance