Many families who have to support their children as they go back to University wonder how they should act when it comes to fees.
One of the most common solutions in Australia is to pay the fees upfront or make early repayments. This way, you can get a substantial discount. But even with all the advantages of this solution, there is a better alternative: student loans. In Australia, students and their families are privileged, because they have one of the most generous student loan schemes in the world, as the Minister of Education and Training, Simon Birmingham, has mentioned at the beginning of this year.
The Advantages of Student Loans
Borrowing money from the government in order to continue your studies has plenty of benefits nowadays in Australia. In fact, this is one of the cheapest loans you can ever have.
To begin with, we should mention from the start the interest rate, which is usually one of the main concerns when it comes to loans. But not for student loans. In this particular case, the interest rate is just the inflation, and you are not charged with any other interest. The other part of the rate is actually paid by taxpayers, not by the student himself. In 2015, the indexation for this type of loan was 2.1%, while any other unsecured personal loan had an indexation of at least 9%. This is definitely a great advantage of student loans and makes them very accessible to any Australian who wants to study at a tertiary institution.
Moreover, an HECS (Higher Education Loan Program) or HELP (Higher Edu4cation Contributions Scheme) loan has very convenient repayment rates. At an income between $54,125 – $60,292, this rate is of 4%. Even though it continues to increase as the income itself is increasing, the repayment rate does not exceed 8%. This is the rate for a person that has an income of $100,520 or more.
Another great news when it comes to student loans is that any Australian can benefit from repayment discounts if he/she pays more in advance. If someone pays at least $500 upfront, he/she will receive 10% discount. However, this happens if the census date is during the current year, even if it’s on December 31. You need to make the payment before the census date if you want to receive the discount. Still, if you cannot afford this until the end of 2016, you will still receive a 5% discount.
Taking all these into consideration, we can say that student loans are definitely cheaper than other loans and have plenty of benefits. Because of these, any Australian should consider this method for financing his or her studies.