The students have to fork out $450 a week for accommodation and mealsand other incidentals while not earning an income, so it's not as if you can start penniless and everything will be covered. The cost of the accommodation alone could pay for a PPL. The dead money "loan fee" could pay for another 80 or so command hours on top of that.
Back of the envelope calculation. $174988 is the max available to borrow for this. Add the 20% loan fee = $209985.
Indexation at current rate of 4.7% on $209985 = $9869. It is applied on 1 June, but the repayments you made through the year are only deducted from the principal when you file your tax return after 30 June.
Google tells me an FO with Qantas max pay is $106000. This takes you into the 6% of wages repayment bracket. So that is $6360 taken off the debt when your tax return is done.
But wait, that doesn't even cover the indexation...you have taken $6360 off the indexation but there is still $3509 of indexation there which will compound with the principal, which hasn't reduced at all.
Lets say you get some bonuses and earn $126468, which takes you into the 8% repayment level. You will pay off $10117 in the first year. Congratulations! You have taken $248 off the principal, 0.118%. $209737. Add the indexation on 1 June...repeat....the only way out of the trap is to make a voluntary repayment before 1 June.
I do hope this is all clearly explained to the students and they go and check with a financial advisor.
Last edited by Clare Prop; 8th September 2024 at 08:15.