University Savings

I read a lot of American personal finance blogs and the common thing for parents to do over there seems to be to pay for their children to attend college. Over here in Australia, things are a little bit different.

Back in the late 70’s, the Higher Education Contribution Scheme (HECS) was introduced. This was basically put in place so that everyone who wanted to could go to university. Basically, the government would pay for your time at university (tuition only) and you wouldn’t have to pay it back until you earn over $41 000. Even then, you only pay 4% of your salary toward it. It’s taken out much the same as tax is.

As such, most parents in Australia don’t scrimp and save in order to be able to send their children to university. Most kids just go to uni and take on a HECS debt. Of course, there are parents out there who probably do save up all the money to pay up front, but for the majority, HECS is the way to go.

I think this seems to be a better method than what occurs (or what I can understand) in America. Yes, you graduate with debt but you don’t have to pay it off quickly and you don’t have to battle high interest rates. Most people don’t even think about their HECS debt as it just seems similar to paying income tax.

What does everyone else out there think of the Australian system? I’m a little bias but I think it’s great.

Oh and an aside, I will graduate without a HECS debt, for which I am very grateful!