Spending Can Be Saving – How to Avoid Excess Student Debt

student debt

Written for Credi by Sarah Dyce

So no one loves the idea of spending tons of money when it’s not necessary right? But there are some serious benefits to paying off your student loan now to save yourself some money in the future.

Now be honest, I bet I’m not the only one who doesn’t pay a lot of attention to their uni fees. But trust me, it’s something worth looking at.

The first time it caught my attention was when I booked my flights for a holiday. I had been saving for months and was so excited to get away! But just as I was about to finalise my tickets the payment choices included a loan option (strange I know) rather than paying by credit card. I thought about it for a moment, thinking that one loan was more than enough for me – I didn’t want to live in debt! In the days following, I started to think about the debt that I already had, and my student loan came back into focus for me for the first time in a long time. I’m sure I’m not the only one who has dismissed that as being ‘taken care of’ and something that ‘I’ll deal with when I graduate.’ Well I wish that I had paid closer attention because I could have saved myself a lot of stress and money.

Student loans, there are plenty of options depending on what uni you go to and what degree you study, but at 17 I was not considering the consequences when I applied to put my degree on FEE-HELP. It just wasn’t something that overly concerned me and I followed along with the consensus with my peers; as long as I didn’t have to pay upfront I would just deal with it later. I never expected that booking flights would be the catalyst to enlighten me of my mistake.

What is FEE-HELP and the other important things people forget about

FEE-HELP is essentially a ‘student loan option for those paying full fees, often those at a private institution or studying postgraduate courses’. But what often gets overlooked or forgotten is that students studying undergraduate courses at approved providers incur a 25% fee onto their loan.

Don’t get me wrong; I think offering students a way to gain an education while not having to pay upfront or in full is amazing – it opens the doors to so many people and allows them access to a higher education they otherwise would not have been able to afford. But, like me I’m sure, plenty of these students aren’t aware how high the inflation is on their fees as each quarter passes.

Did you know that each year on June 1st your overall debt is taxed and adjusted for inflation? Although this percentage has decreased since previous years, it’s still adding on an additional 1.5%*, which may seem insignificant, but when you look at the long-term implications of much this will cost you, you may want to pay closer attention. 

Meet Alex

To make things a bit clearer, let’s put that in context, here we have Alex.

Alex is studying a Bachelor of Commerce at a public university and is expected to graduate with about $35,000 of debt. Each semester Alex has the option to repay some of her loans or keep putting it onto FEE-HELP. Given the degree she is studying, Alex has about $5000 per semester in unit fees.

This $5000 a semester once indexed at 1.5% becomes $5,075 (an additional $75). This $5,075 then gets joined by next semesters $5000 ($10,150 in total) which then gets indexed again at 1.5% and so on and so forth etc. and all that.

So by the end of one year of study, Alex went from an expected $10,000 for unit fees to $10,150.

$150 to access tertiary education for a year is a fairly good deal, but it’s what happens next that can catch a lot of people out.

Remember Alex? She decides to switch universities and is now studying at a private provider where her debt will be subject to a 25% fee before it gets to the point of indexation. Alex now pays $12,500 in total for the year, instead of just $10,00 for the unit fees. What this means come time for indexation is that Alex will pay 1.5% of $12,500 not 1.5% of $10,000. Not only will Alex pay more to defer her fees, she pays more each year as the debt is indexed.

Obviously more factors would play into this in real life, not all units cost the same, sometimes scholarships are available, etc. But this is just the money needed for unit fees using the FEE-HELP system; this number doesn’t cover any textbooks, university administration costs, travel costs, cost of living and plenty of other expenses that university students fork out each semester.

Taking a Closer Look

All of this information altered the way I approached university. It made me much more aware of the implications that some of these government schemes entail. If you’re like me and would prefer not to fork out the hypothetical $2500 extra a year, then the next few things should be helpful to you.

  • Be proactive
    • It is never too late to look at your fees and your repayment options, 1st, 2nd, 3rd year? Doesn’t matter! Take a closer look at your FEE-HELP account to see if there is anything you could be doing to save yourself some money in the future.
  • Research
    • Yes, not the most fun in the world but researching your alternative to a government loan can be constructive if you want to prevent unnecessary fees in the future. There are plenty of websites and non-profit organisations both online and in person where you can go and discuss the options that best suit you and your needs.
  • There are plenty of other options
    • FEE-HElP is just one of the options available to assist with university fees, there are various other options depending on your degree and needs, some of these include;
      • Banks
      • Personal loans
      • Scholarships
      • Company grants
      • Mum & Dad
    • Keep an eye on the news
      • Watch out to see if there are any developments in policy changes relating to student loans
      • The government previously had a matching scheme where they would contribute you your debt if you made a voluntary repayment
      • Sadly this was removed at the beginning of 2017, but with the state of Australian government whose to say something else won’t pop up?

The Bank of Mum & Dad

After I had looked at all my options, I found the best way forward for me personally, was to take out a loan from Mum and Dad. A lot of the websites I looked at were talking about how my future employer would take a chunk of my pay and put it towards repaying my debt, which got me thinking, why can’t I do that with my parents?

A long discussion later, I organised with my parents an alternative way to cover my uni fees rather than FEE-HELP. Similar to the future employer scheme, my parents would pay my units in full (with the aim to avoid any excess debt), and in turn, I would contribute a percentage of my weekly pay to repaying them.

By organising my method of payment for uni, while yes, it does mean that for now, I have less money to add to my savings. By the time I graduate, and *fingers crossed* enter the workforce with a real job, all of that paycheck will be coming to me, not to the government.

There are some amazing websites and people out there who can help you find an alternative to FEE-HELP, one of those gems is ‘Credi.

Credi is an online platform ‘powering the bank of Mum & Dad’ as they say, which in its essence is simplifying lending between family and friends by assisting in building a loan, negotiations, contract, and repayment method. All taken care of for you! The best part; it’s FREE!  That’s right, you heard me, FREE! No need to pay any accountants or lawyers, no having the fact your parents pay for uni thrown in your face every argument, all taken care of in a nice little package for you.

Learning From My Mistake

This is the stuff I wish I had of known when I first started uni, not now I’m already in debt, but please learn from my mistakes!It’s always worth discussing with a financial adviser to ensuring you are maximising your dollar not delving further into debt than necessary. Don’t just brush it off for future you to deal with, I’ve been that person and trust me I am not happy with my past self for it!

It’s always worth discussing with a financial adviser to ensuring you are maximising your dollar not delving further into debt than necessary. Don’t just brush it off for future you to deal with, I’ve been that person and trust me I am not happy with my past self for it!

For more information on student loans, check with your institution about payment options to see what it is available for you. Discuss it with Mum & Dad and don’t’ forget organisations like Credi are there to lend a hand if things get confusing!

Happy saving everyone!


Written for Credi Pty Ltd by Sarah Dyce


Credi Loan Agreement and Repayment Management


0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *