OPINION: Gen Debt destined to never pay off their loans
PERHAPS we should lump Gen Ys and Millennials into a new category known as Gen D, a generation that has no hope of paying off its HECS debt, let alone owning their own home.
Two recent studies paint a bleak picture of what is in store for the next generation coming through.
The annual bill for HECS, or HELP as it is now known, is $7.8 billion and about 20%, or $1.6 billion, is considered bad debt.
In other words, the government has no hope of ever collecting that debt and is likely to have to write this off.
At the moment, graduating students don’t start paying back their HELP until they hit an earnings threshold of $54,186.
A quick show of hands in our newsroom yesterday had about six people raise their hands with only a small proportion of them earning enough to start paying back their student debt.
That is why the government is considering lowering the payback threshold to $42,000, which is expected to increase the number of people repaying their debt by 50%.
Take home pay for someone on $42,000 is not a lot when you take out food, rent and bills.
If these income earners have to start paying off their student loans they are not going to be in a position to purchase their own home for a very long time.
Indeed, a recent survey has confirmed that pessimism with almost three in five Aussies believing the next generation will never own their own home.
Perhaps the next generation is destined to be a nation of renters who find uni totally unaffordable.