The Real Cost of Uni in Australia

Jason · 00:00Welcome to episode 228 of The Numbers Game. I'm Jace, I'm here with Nick and Marty. How we going, guys?

Marty · 00:06Going? Well, thanks Jace. Going well up for the fight today. Ooh, yeah, up for the fight. I love

Jason · 00:11when Marty's up for the fight. I'm, I'm, I'm gonna get straight into it because I reckon there's a bit too unpack here and I didn't think it was gonna be, you know, that much of a hot debate, but I turns out now rethinking it will be because I wanna talk to you guys about an $80 billion problem for Australia.

Jason · 00:29Do you know what it is?

Marty · 00:30There's a lot of them.

Nick · 00:32Definitely not negative gearing. 'cause that's 165.

Jason · 00:34Yeah, that's double. That's double. But that's over 10 years. This is just the current balance of, uh, I'll, I'll get, I'll tell you what it is. It affects our economy. I think it affects our future and I think everyday Australians that are coming through the education system right now should be thinking about this.

Jason · 00:49And that is help debt, which. Back in my day or you guys, Marty, I don't know if it even existed in your day, but Nick, you and I might remember it as a hex debt. Uh, yeah. And now it's called a help debt, so Yeah,

Nick · 00:59yeah,

Nick · 01:00yeah. Just trying to polish a turd, change it from Hex to help

Jason · 01:03Well that, you know, the government always loves a rebrand to make things, uh, more exciting and, uh, sound sound better.

Jason · 01:09But Marty did that. I'm, I am gonna ask you. I'm sorry.

Marty · 01:12Yeah, it hex, hex debt was around

Jason · 01:15you were the fir first generation to get it. I think

Nick · 01:17you've got an award for going. To uni didn't, you didn't get in awards back then?

Marty · 01:22I dunno. They used to frame a lot of stuff, but I think I'm the one that got framed with all that.

Marty · 01:27But, um, yeah, hex in Germany is called, is witch, so I, so it's a witch debt. So that's, uh, that's all I'll say. Geez, that might

Jason · 01:38be something to unpack, but, but effectively, you know what, what I wanna talk about here, and, you know, it does, does, um, touch home a little bit when, you know, talk about, you know, I've, I've had a help debt or a HX debt myself and Nick, you, you would've, do you remember the balance of what yours got up to by the time you finished?

Nick · 01:52I've actually got no idea, to be honest. I, and I couldn't even, I, I remember when I paid it out and I wasn't, I wasn't that young. Um.

Nick · 02:0030 grand rings a bell,

Jason · 02:01which can still take, you know, at six, six or seven years at, you know, the, you know, your startup wage or you know, your younger wages as you're kind of working through.

Jason · 02:10And, you know, I, I've always had this kind of conversation as well when, when Greg and I started out in the accounting industry, I think my, my first salary was like $40,000 and it wasn't even enough to, to make a help repayment or a HX repayment, um, as a graduate accountant, 20 4K. Oh, that's how your first salary, geez, it's four oh bucks a week, mate.

Jason · 02:28Well. They now we're, I dunno if we're showing our age, Marty's probably going boys. That's, that's, that's big salaries. Back when Marty, what was the salary when you got your first job?

Marty · 02:36Uh, when I went into the bank it was 24,000 in 90, 92. So, yeah, that was the first job. Oh,

Jason · 02:46well there you go. It is just job, legitimate job.

Jason · 02:49Lots of apple picking in between then lots of hustles, side hustles, lot

Marty · 02:52of hustle, little hustles, few standup nights.

Jason · 02:55The, the help repayment thresholds and the percentages have changed every year for the last, you

Jason · 03:00know, 10, 15 years that I've, that I've been working, you know, a, a full-time, big boy job after university.

Jason · 03:05But, you know, you get into uni, you pick your subject, it's free money, you know, essentially. Mindset wise, because you're gonna do this degree, and once you've got your degree, you'll learn a big salary 'cause you're a university qualified person. And, and you know, you'll, you'll pay it back. But it's not until you actually strip back the numbers.

Jason · 03:22And, you know, again, as, as young Aussies or people making a decision to go to uni and study courses. Um, I had an example of, of a client who, um, she actually did a pri primary school degree and then followed into a law degree because she decided not to be a primary school teacher anymore. And I, I think the balance ended up over $80,000 across multiple degrees.

Jason · 03:42Um, I. And looking at the numbers at, if I've run, run the numbers based on earning a low six figure salary, so call it around 120,000 for the first few years of a career. If you know you're entering into the law, law career, that's probably not a bad space to be earning over the first couple of years,

Jason · 04:00and you'd be looking at about seven and a half percent of your salary would go back to help repayments.

Jason · 04:05So at 7.5%, you're losing $9,000 a year. Back to your help repayments now 80,000, not including the fact that that's gonna go up with CPI or indexing each year. It's gonna take you nine years of making help repayments to be able to pay back that debt, and that's nine years that you don't have additional cash flow to purchase a property.

Jason · 04:28Um, or nine years that you're servicing this debt, which does affect borrowing capacity. That's correct, guys.

Nick · 04:33Affects borrowing capacity and Marty's revenue. So it's a big issue.

Marty · 04:38I think it's deplorable. I, I, I just think like, just load young kids up with debt. You know, and then, you know, you, you yes. Go into the career that you want to go into.

Marty · 04:50But I just wonder, well, I guess you, the argument the other way is I guess they wouldn't have the chance if they can't afford to go into it, then they might not have the chance to go and

Marty · 05:00study. But um, far out something doesn't sit right with that to have someone 80 grand in debt and then be five years before you're even working.

Marty · 05:09Um, you know, with four or five years it's seems like. Very anti-intuitive to me.

Jason · 05:16Yeah, there's, there's plenty of stories as well. I mean, I've got clients with 40 to 50,000 or, or you know, all these different numbers. But you even think about, um, women who just get started in their career and then they, um, have children.

Jason · 05:29They come outta the workforce or from earning enough money to tip into the threshold to make help repayments, and then all of a sudden, a few years later when they get back into the workforce, the help debt's gone up with indexation every year. So they're kind of two steps forward, three steps backwards.

Jason · 05:43So again, there's talks about whether that should be frozen, you know, or, or how to make the repayments, you know, somewhat actually makes sense so that the debt comes down and that, that is the reason I bring this up is that. This $80 billion problem is growing every year. It's not like what's happened is that, you know, the, everyone who goes through

Jason · 06:00a university or, or does these, um, help loans or hex loans and there's other versions of 'em, student support, loan trade support, loans, it all kind of conglomerates together.

Jason · 06:09But you'd think if we were, um, promoting or providing an economy where people finished university, got into successful jobs that paid them enough to make their repayments, we would actually have a reducing debt number because the repayments would be outweighing or at least be making a dent at it. But year on year, this debt has grown and gone up.

Jason · 06:28And where it became, I guess, more in the spotlight was now that we're having increasing inflation, it's causing the number to go up even more when they apply indexation. Now the government's decided to cap that and probably another reason I kind of bring this up, um, you know, probably 'cause I'm a little bit dirty 'cause I've paid off my help debt in full.

Jason · 06:48The government announced at the end of 2024 calendar year that they're just gonna blanket make 20% of the balance of the help na the nation's help debt

Jason · 07:00balance that it's gonna make 20% of it disappear at the end of this financial year that it's gonna wipe $16 billion. Just write it off like it never existed.

Jason · 07:10So I'd be interested in your thoughts on that, guys.

Nick · 07:12I think it's, it's just a vote grab at the end of the day, right? Yeah, that's what that is. I

Marty · 07:15think it's, uh, it's just a bit of gameplay more so than anything else. And I, I'd be disillusioned if I'd spent all that time paying off the debt. Um, it's probably the right thing to do at some level too, so, but no, that's, uh, I'm just sitting here annoyed.

Nick · 07:31Yeah, it's, it's, it's annoying, but. Here's my theory on it. That's the help. Debt is not the problem. The the, the problem is the cost to educate. Some someone's gotta pay. Right? And that's why we're having this argument because someone's gotta pay for, for people getting educated. But the bigger issue is, well, why does it cost that much to get educated?

Nick · 07:55And you know, I'm just thinking about my own university degree.

Nick · 08:00My contact hours were 12 hours a week, so 12 hours a week is all I had to go into uni. The reality is I never went. I did it all online and that was back in, you know, the early two thousands. So I would go in and I would get all the material I would study, um, I would go in, I would sit the exam.

Nick · 08:17I knew I just had to pass the exam and I was away and I got my degree. I didn't, I was barely at the university. Now I went for a walk around, what's the uni near the, um, Melbourne hospital? Just in the city here. It's that Melbourne Uni.

Marty · 08:30Not sure.

Nick · 08:31Anyway, I went to Vu, teen Footscray, so I think we were at the hospital and trying to kill a couple of hours.

Nick · 08:37So we went for a walk around the university and I, I didn't, I couldn't believe. That building and what was going on in there. Unbelievable. Like perfectly manicured gardens, like, uh, sports facilities, all this stuff. And when you look at this and you're thinking, well, people are gotta pay for this, I actually wonder what the cost could

Nick · 09:00be to deliver education if they had to pin it right back.

Nick · 09:04I know there'll be counter arguments to that for sure, but at the end, the end of the day, if it's creating debt that people can't afford to pay and the government can't afford to pay as well, then there's a bigger problem. Now, Jace, I did accounting, banking, and finance. I can also tell you that most of my learning was done on the job.

Nick · 09:23So did I get value outta the university degree number one. I barely went to the university 'cause I was only 12 contact hours a week. I never used the sports facilities at the university because I was playing footy and gonna the gym around the corner, like they've all got pools and basketball courts and whatnot.

Nick · 09:39Um, and number three, you learn a bit of theory, but most of it you learn on the job. Now that's my degree, obviously we. There's other degrees we spoke about before, like, you know, doctors and stuff where you've, you know, it's probably gonna be a bit more intense, but working how to balance a, working out, how to balance a ledger, I can easily do that online.

Nick · 09:58I don't need to go to, you know, Melbourne

Nick · 10:00Uni or VUT to, to do that. So I wonder how much they could say by delivering the, the education in a different way. And then second to that. How much could they then, uh, lean on existing organizations to provide that education? So, you know, as an employer, what, what I can say is we do not like taking people that are not experienced because the downtime out of our business, it impacts our margins too much.

Nick · 10:28So we don't have a profitable pool business. It impacts. How people get paid. So we need to have a profitable, profitable business. The, the minute we take on someone inexperienced, it's an issue for us. So we don't take on graduates as a small business, unlike a, you know, top four accounting business would.

Nick · 10:45However, if, and, and I know the government does this in some ways with apprenticeships, but you know, if someone could maybe come into our business and we can get a capital injection from the government to train them, or maybe we, the final year of university is done inside of a business,

Nick · 11:00hypothetically, I just think the core issue is the cost.

Nick · 11:03It's not the debt. Someone's gotta pay the debt, but why is the debt going up? Because the cost to deliver is going up. And how much value, particularly for certain. Um, for certain, um, topics, how much value is actually being delivered versus getting into the workforce and learning that way. That would be my argument, which would mean certain degrees cost more than others based on what you actually need to do.

Nick · 11:28Do you need to go to uni or can you do it all online? Catch up with someone once every few months to go through a few things. Balance that with work experience on the job training. Small businesses get an injection to spend the time for you to do that, but they've gotta fix the core problem, which is the cost to deliver the education.

Nick · 11:43And is it a relevant cost based on the outcome? Uh, I can definitely say for me. It wasn't a relevant cost for the outcome. Um, 'cause I don't think I learned much at all at uni. And I think going a little bit more than I did wouldn't have made a huge difference because you're young, you muck

Nick · 12:00around, that's what you do.

Nick · 12:01I learn when I got into the workforce. Couldn't agree more, Marty.

Marty · 12:05Yeah. Well, I mean, I've annoyed many people because of my lack of, uh, education and what I've been able to do just in business because, you know, like you said, you hit the ground running. You're learning from the ground up and you're applying what you're learning immediately.

Marty · 12:19So they even, you know, I, I got offered to go to uni and do journalism at RMIT, but I didn't take it up because I just thought there were better things I wanted to do and I wanted to just get into the workforce. I didn't want to lose four years. Um, now if I wanted to be a commentator on Channel seven, maybe, you know, maybe Right.

Marty · 12:37But, um, yeah, and I, and I guess it depends on you. Yeah, what, what you want to do ultimately. But I look at now even with, um, Charlie's homeschooling, like we pay, I think around about 275 bucks a month, but it's self-directed learning with teachers and with people online. And if you're advanced, you can advance very quickly, you know,

Marty · 13:00through it.

Marty · 13:00Like I know he is doing year eight maths and, you know, but, but it's based on the child, you know, it's not just, this is the grade and this is the format. It's, it's actually acknowledging the child. And I think moving forward, I would think that delivery method would become more and more popular as people have more flexibility in where their day is spent and what they're doing and what they want to do.

Marty · 13:24There's nothing to say that, you know, you can't, you can't. Get that education at a lower cost, Nick. So I, I think there'll be a, I think there'll be a massive revolution in education over the next five, 10 years. And I'm, I'm experiencing it firsthand and, um, I, I think it'll continue to go down those lines and it'll be much more cost effective, but it'll be at a price point, the more people will be available to pay without having to access debt.

Marty · 13:51As well. So it's like a real time expense, but it's probably, I would say, oh

Marty · 14:00geez, it would have to be maybe 10 times cheaper than going to private school for the year. And yet, because it's so individualized, um, the advancement in the person and the interest in the learnings, um, uh, uh, is there. So I go, I, I like those odds, right?

Marty · 14:18Even logistically, I think financially that that's a better premise and then people can, you know, can afford that type of education. Maybe uni's the same, you know, it's, it's like we say people going into finance, you know, you get your Cert iv, you get your diploma. Yes, there's a cost to it. Maybe the government pays, like you said, their last year of, um, uni or coming out of high school, whatever the case may be, depending on where, where the person's driven to go.

Marty · 14:44And, um, there could be options. I think doctors and everything that has to be thought. Yeah, anything very specific and highly detailed has to be thought through very carefully. But, um, again, I think it can be reimagined.

Jason · 14:58Well, I think as well, one,

Jason · 15:00one thing I'm trying to channel my mind back all these years ago to when I chose to go to university.

Jason · 15:05Now I don't think, oh, how do I rephrase this financial education for young people. What, what you learn at primary school and high school around finances, I think it's severely lacking. We don't learn the basics and the fundamentals and it's up to your parents. And if your parents don't teach you, then you go into the big wide world, uh, shit outta luck and, and not really aware.

Jason · 15:26So. I don't think my parents did a bad job educating me on financial decisions. When I chose to go to university and signed up to Monash and did a bachelor of business, majoring in accounting, banking, and finance took on the extra units. It was free money without anyone really explaining how, you know, I was 17, 17, finishing high school at 18, making a decision to go to university.

Jason · 15:49And when someone's like, yeah, you don't have to pay for that upfront, don't worry about it. It's an interest free loan, and you just pay back that la pay that back later when you get a job. There's no, didn't feel like there was much more of an

Jason · 16:00explanation about how it worked, how long it would take, how it would financially impact me down the track.

Jason · 16:05Now, would it have stopped me going to university? Probably not, but. My decision making around money, the extra units, potentially, I wouldn't have done the double major and I would've done the single major and I might've been 10 grand ahead, um, from a debt perspective, um, on the help debt. So I think there's a lack of understanding about how it works.

Jason · 16:22And then that's all also why the debt isn't going backwards, because people just aren't. In a position to be able to start to pay it down fast enough. When you get to the other side of it, by the time indexation applied and the debt goes up and up and up, by the time you finish uni and then work in your career long enough to start making repayments, it may have gone up by another five or $10,000 over multiple years based on indexation.

Marty · 16:46When, when you said that out loud, Jace, that may me almost feel disgusted because again, it's a

Jason · 16:52lot, it's a lot of debt that you're letting young people commit. It's a lot

Marty · 16:55of debt. And what you've explained is they're not teaching. People how to

Marty · 17:00manage their money in school because would you make that commitment, understanding the wider consequences of that?

Marty · 17:05You could be putting it into a share portfolio. You could be learning online for a 10th of the cost. You could be doing, you could be taking alternate routes that you, you are not sort of given real access to unless you're really in independently thinking on this. But at 17. Hey, who's really independently thinking, right?

Marty · 17:23It it's like you, you, you're just finding your feet in the world. Yeah. It's um,

Jason · 17:27and how, how many 17 year olds without a job can take on 40 K of debt?

Marty · 17:32It's crazy. It's like when you say it out loud, it's crazy. I.

Jason · 17:35Yeah. Yeah. And, and that, that is the situation of how, if you look back at where majority of this 80 billion started, it's probably kids coming outta high school making decisions about their future without an understanding of what that debt actually means.

Jason · 17:49Um, I did wanna touch on as well, I. Where, you know, Nick, what you said about how to make this affordable or how to bring the cost down, you know, the no frills version of the education. Like I look

Jason · 18:00at the salaries and, and the way those universities are structured in the physical sense. Um, and, you know, I look to other places around the world, so like Finland, um, university education is free for EU students, Sweden and Norway.

Jason · 18:13Higher education is free or heavily subsidized, and you look at it and go, well. If the government's sitting on 80 billion of debt and they're never really gonna get it back, are they gonna start writing it off? Essentially, we're kind of going towards a higher education, borderline free here, but what if it was just more affordable and people actually paid their way?

Marty · 18:32What would it, what would it mean for the country, for the government to say, we're investing in our people. Mm-hmm. You know what I mean? And, and. Creating innovation and, you know, we've talked about, you know, financial management, but just, just in general, like imagine the excitement around that and what people could potentially come up to.

Marty · 18:50It changes the whole, the whole atmosphere about learning. You know, it's, um, yeah, and, and it just feels so archaic. The other

Marty · 19:00way in comparison to that, when you hear Finland is investing in their people. I mean, you don't need to try and buy votes. You're gonna get votes.

Jason · 19:08Create a smarter country right, full of people correct.

Jason · 19:11Who are educated and making good decisions about you know, what they wanna do with their lives, and feeling empowered that that education is available to be able to tripping

Marty · 19:19tax off everyone. Yeah.

Jason · 19:20Well, that's exactly right. So, um, look, I, I brought this one up as a, as a bit of an interesting, uh, one just to get, you know, the minds ticking as to how that looks and how it works.

Jason · 19:29I think if anyone's listening to this and they do have kids that are coming through, you know, high school age, I think the conversation around how they're gonna pay for their education and what a help debt looks like, um, when they're on the other side of it, just a, a interesting curve ball for those that are in their career and want to do a master's.

Jason · 19:48I've always found this one interesting. You can get what's called fee help, and hypothetically, let's say each year a master's is $10,000 if you're in the higher tax bracket.

Jason · 20:00This is, this is where we see this work out really well, and I'll just throw this in as an extra tax tip at the end. If you're in, if you're in the 45% bracket and you decide you wanna do a Master's and you can get access to fee help.

Jason · 20:12That, let's say each master's is $10,000, even though you've used fee help and got the government loan to pay for it, you can claim a $10,000 tax deduction for the cost of that unit or subject on your masters. And then as an example, you get a four and a half thousand dollars refund. Back on your tax return.

Jason · 20:31Now of course, those help repayments start coming out the other side to pay that loan back, but you've got the benefit of the tax deduction upfront for paying for that course through that, um, government loan. It's different to a help debt. It's a very specific type of fee help. Um, but you know that that's an example again, but.

Jason · 20:49I sat there the first time that came across my desk many years ago. I said, what the hell? You get a tax deduction even though the government paid that 10 grand for you to do that master subject, and then they're gonna

Jason · 21:00give you four and a half grand back. You still pay for

Nick · 21:02it though, right? Just over the years.

Nick · 21:03But

Jason · 21:04yeah, you're still paying for it. It's coming back out. You pay on the other side as well. It's just, yeah, again, but like why? Why does it need to happen that way? Like, yeah,

Nick · 21:14why do a masters to be a master of. The topic, does it, do you earn more money if you do a master's? Uh, it's a legitimate question

Jason · 21:21that is the required connection to say that, you know, the reason that's tax deductible is that you are more likely to have pay increases because of your masters in the line of work that you're doing.

Jason · 21:32So that's generally like anything that's a tax deduction in Australia need a, a nexus or a connection as to why you can claim a tax deduction as to either be required for your work or go towards you earning more accessible income in the future. Wow. Anyway, keep an eye out for the next couple of months.

Jason · 21:48You know, as I said, a budget is coming up. Um, it was already announced this 20% reduction, so this $80 billion debt will magically turn into, you know, less than 60 billion or give just around 60 billion bit over. Sorry,

Jason · 22:00it's end of the day. I need coffee. Just one question. Yes.

Nick · 22:02Who's who? So what are they taking away as a who, who, who are the lucky ones?

Jason · 22:07Anyone with a balance at the moment will just automatically have 20% wipe. So you get to, oh, say that's 20%. Sorry, I missed that. Yep. Sorry. Yeah, so the, the example that I've got there is, um, you get to the end of this financial year and you are sitting on a $50,000 balance in your help debt. They'll just wipe $10,000 straight off.

Jason · 22:25You'll go to a $40,000 balance, give or take whatever CPI or, or indexation does. Um, and what they're saying is that it's the little leg up that Aussies need to be able to. Start paying off, paying off and getting their, uh, their help balances, um, to where it needs to be. But I sit there and go, I, I haven't gone into the detail, but I wonder if, if, if I've got a 10, let's say, let's say one of my clients has a $10,000 balance, and during the 2025 year they've paid $10,000 down.

Jason · 22:56That $10,000 won't be. Kind of

Jason · 23:00offsetting the account until they lodge their 2025 tax return. So let's say in September, 2025. So even though again, it's this, this thing the government does, I think it's gonna happen this way. That. Even though they've got the 10 grand in their pocket, the balance is 10, it's gonna drop to eight, and they're gonna have to give two grand back to that person that was just about to pay off their help debt in full.

Jason · 23:22They're gonna give 'em two grand back, which is fine. They'll spend the money elsewhere and you know, it'll come out in the wash. But again, it's these government decisions that, you know, we sit there and you know, scratch our heads going. You know, vote, grab a hundred percent. It's coming into election time.

Jason · 23:37There's gonna be some people out there that are going, sweet. 20% of my debt's now reduced. Uh, how good.

Marty · 23:44I know who needs the real help. Goodness.

Jason · 23:46Hmm, a hundred percent. Well, just thought that was an interesting one for you guys. I don't have any major answers, but just wanted to watch out for these, uh, cheeky little government decisions.

Jason · 23:55Um, if you have listened and you do have a suggestion on how higher education

Jason · 24:00in Australia can be done better, we'd love to hear from you. Um, drop us an email hello at the numbers game [podcast.com](http://podcast.com) au or connect with Jason, Nick and Marty on LinkedIn, Instagram, or follow at the Numbers Game podcast as well.

Jason · 24:13We're always pretty, uh, active on all of our different socials. Give us a follow, give us a like. Cheap education. Yeah, free education. When you go back and listen to 228 episodes of the Numbers game, the podcast, um, you'll come out the other side, uh, much smarter than when you started, I promise. An absolute master.

Jason · 24:31I appreciate you tuning in. Thank you for listening, and until next time, I.

Marty · 24:34Invest in yourself, but don't drown in debt along the way. There's always a smarter way. Game over.

Jason · 24:42This podcast is for educational and informational purposes only. The conversations are of a general nature and do not qualify as financial or tax advice.

Jason · 24:50We recommend before you make any financial decisions, you consult a licensed professional. Individuals on the podcast may hold positions in the companies discussed. ---