The Bank of Mum and Dad is not extending its generosity to paying down student debt despite this year’s large increase in the indexation rate applied to the debt.
Parents looking to give their children a helping hand financially are sticking with helping them with a home deposit rather than with their student debt, regardless of predictions the rate of annual indexation could be high for years to come.
Social researcher Mark McCrindle says parents are more supportive of helping their children onto the property ladder than helping them pay down student debt.However, the parents of those who hold the debts, who have the financial capacity to help, appear to be more inclined to help their children into the property market than pay off their debts, says Mark McCrindle, social researcher and founder of McCrindle Research.
The student loan system, known as HECS-HELP, is widely considered to be fair as the debt is repaid only once income hits a certain threshold. Voluntary payments can be made. HECS-HELP repayments and repayments of training loans are not required to be repaid until a person earns an annual income of $51,550 during a financial year, with the percentage payable increasing in bands the higher the income.
Student debt is considered by lenders in home loan application assessments, with the potential to reduce how much can be borrowed. Nevertheless, McCrindle says it appears parents are more interested in helping their children into the property market.
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