Millions of graduates have made voluntary HECS debt repayments to avoid the indexation rise, but financial experts have urged graduates not to panic and should instead focus on any other forms of debt.

The average graduate with a $22,000 HECS debt earning $69,000 would have lost $15,000 in borrowing capacity, according to modelling from CompareClub.

But a single person with seven years of extended studies would see a drop in borrowing power of more than $104,000.

Head of Lending at digital lender WLTH Cat Mapusua agreed, saying while the decision to pay off HECS or secure a mortgage depended on overall savings, loan metrics and individual factors, she would not encourage clients to focus on HECS.

“It’s not considered a ‘real debt’ as there’s no term, there’s no interest, and it’s based on index from inflation [which varies],” she said.

“It can sit in the shadows while you’re focusing on true debts, where there’s interest that’s constantly accruing with a term, so they have a deadline toward that debt.”

Full Article: Sydney Morning Herald