Hi, Does anyone know what happens to a student's HECS Debt in Australia if we end up having a financial crisis here in Australia and end up with hyperinflation like there has been in lot's of other countries around the world when they went through hyperinflation. For example, here is a list of countries that have experienced financial crisis in the last 20 years. 1989–91 – United States Savings & Loan crisis 1990 – Japanese asset price bubble collapsed early 1990s – Scandinavian banking crisis: Swedish banking crisis, Finnish banking crisis of 1990s Early 1990s recession 1992–93 – Black Wednesday – speculative attacks on currencies in the European Exchange Rate Mechanism 1994–95 – Economic crisis in Mexico – speculative attack and default on Mexican debt 1997–98 – 1997 Asian Financial Crisis – devaluations and banking crises across Asia 1998 - Russian financial crisis 21st century[edit] 2000–2001 – 2001 Turkish economic crisis 2000 – early 2000s recession 1999-2002 – Argentine economic crisis (1999-2002) 2001 – Bursting of dot-com bubble – speculations concerning internet companies crashed 2008-2011 – Icelandic financial crisis 2007–08 – Global financial crisis 2010 European sovereign debt crisis 2014 - Russian financial crisis 2010-2018 - Greek government-debt crisis 2018–present - Turkish currency and debt crisis, 2018 source: https://en.wikipedia.org/wiki/Financial_crisis
HECS is indexed to inflation CPI. But i guess if there was hyperinflation you would pay it off outright quick, though i can't see hyperinflation happening in OZ.
Wouldn't that make the HECS Debt more difficult to pay off, since the out of control inflation raises the level of HECS Debt to a much, much higher level?
HECS interest/indexation is applied only once per year on the 1st of June. If there is high CPI inflation of say 15% and you couldn't afford to pay off your $50k worth of debt then yes your debt will just keep going up. So say you pay off $6k of your $50k debt, then you're down to $44k. But come 1st of June your debt will be bumped back up to $50.6k. This is not an issue if there is also wage inflation since you will also be getting paid 15% more per year. But most likely there will be stagnation, so prices rise but wages stay more or less the same. Then that debt really starts to become an issue. No real point talking about hyperinflation, as in that situation student debt will be the last thing you will think about.
Yeah, I just found this article that talks about the danger of an student having a HECS Debt during runaway inflation. Look at the following quote: But what if inflation were to escalate? "If the CPI went through the roof, then you would be in all sorts of trouble," says Matthew Esler, head of technical services with Advance Asset Management. Source: https://finance.nine.com.au/2016/10/07/13/53/inflation-makes-hecs-costly
How do we know CPI understates inflation? Do we have any credible sources to support this? I found the following article, which makes sense because understating inflation benefits the government by resulting in the government paying much less social security payouts and other liabilities. https://www.zerohedge.com/news/2014-11-11/how-much-does-cpi-understate-inflation
My HECS debt has been indexed every year (roughly 1.9% annually over the last 8 years). Glad I will be HECS debt free as of EOFY.
cost of cup of hot drink at the store up by 10c cost of public transport to work up few cents cost of monthly rental up 50-100 mostly impact the lower income most, car tax is not up computer price is not up satellite disk price is not up
So if CPI goes up to 15%, but a person wage rises by only 2%, it would get progressively harder and more expensive to pay off one's HECS debt? And we can probably expect CPI to rise very high if Australia enters a financial crisis soon which looks like a real possibility?
back in 1997, the Uni offered a 15% discount on school fee, but their currency devalued by 80% depending on each effected countries, so many students got to go home