Forman Financial Services

Affording a higher education

School leavers furthering their studies face university costs that leave many with a legacy of debt while others won’t be able to attend uni at all. A fortunate few have parents who planned ahead.  Which best describes your situation?

According to the latest government figures, the annual cost of a university degree can be around $37,000 – higher for courses like medicine.

In May 2014, the Australian Government proposed reducing government university subsidies from 1st January 2016. If passed, this legislation will result in higher costs to the student.

Where will that leave most people? Parents are known to mortgage family homes to fund their child’s tertiary education, while students rely on part-time jobs.

These are common solutions to an increasing problem, but there are alternatives.

HELP debt

This is a government-supported loan provided to eligible students to assist in meeting education costs.

The HELP scheme encourages student contributions to their university fees by reducing the overall cost of the course, although this may change if proposed legislation is passed.

The Australian Taxation Office (ATO) is advised of the amount of debt accruing on your HELP account. If your income exceeds $53,345 in the 2015 tax year you must start repaying some of your debt – even if you’re still studying. This figure increases each year.

HELP debt repayments are deducted from your income and submitted to the ATO by your employer in addition to your PAYG tax.

“Help, I’m a student with a HELP debt!”

The government encourages voluntary HELP payments but students usually can’t afford to make them.  But you may be surprised what you can afford if you set up a realistic budget.

Ask to meet your parents’ financial planner. Not only can they show you how to clear your debt, they can develop a strategy to help establish future financial security – and a good adviser probably costs

less than you think!

What can parents do?

Parents are considering education costs in their overall financial strategies. Through targeted savings plans with attainable goals, small, regular contributions really add up. An investment bond might be a good way to start small when your child is young. When ready, he or she could receive a sizeable sum of money to pay towards their higher learning. Bonds attributed to educational purposes attract significant tax concessions and if held longer than ten years, a bond is paid free of capital gains tax.

There are other options including insurance policies that may suit different family needs.

Higher education is expensive but with the right strategy in place, no goal is out of reach.

Talk to us today for information on how to reduce the stress associated with education.


For more information on this subject feel free to get in touch with us click here

To receive free updates on relevant information click here

To read more about specialised service offers for Financial Planning please click here