Paying off school loans early?

Paying off school loans early?

15 April 2008

School loans in Australia are luckily quite easy to obtain, as citizens entering a Commonwealth supported position at a university can choose to defer their HECS-HELP contribution until they are making more than a reasonably high amount of money per year, currently $39,824. Some choose to pay their school loans off earlier, however, in order to receive discounts on their total contribution, as well as to avoid accumulating interest. If you're a student who would like to pay your school loans upfront, then there are a few steps you may be able to take in order to afford it.

Live as cheaply as possible

You may be thinking about moving out for the feeling of independence it will give you, but if you currently live at home and your parents are happy for you to stay for the moment, you'd do better financially to do so. Unless your parents charge you outrageous amounts for board you will likely spend two or three times more living away from your family.

If you've already moved, then do not fret, but you may want to analyse how you are living. Where you live will have a massive effect on your cost of living, so you will need to prioritise paying off your school loans early or else forget it to live where you want to. Trendy places to live are usually much higher in rent and can have limited access to inexpensive essentials. If you decide you favour fun living to being free of school loans, then you may also want to invest in a premium credit card to take advantage of any reward points you might be able to gain on purchases.

Spend your tax refund on the loan

While you are making a limited amount of money per year, you are still likely to receive a reasonably high tax refund. Rather than spending this on frivolous things, keeping it ready to pay off your next amount of school loans can be one of the easiest ways of devoting money to your course. If you have missed the period of discounted payments, then you may want to save the money in a high interest savings account instead, as the interest you accumulate on savings will almost certainly be higher than your school loans increase, as they are indexed only at the inflation rate.

Please visit our credit cards and online banking pages for more information on finance options to help you pay off your school loans.

Back to News Index | Back to Home