Meet an Australian millennial with $7,000 in student debt who says paying off the balance 'is not my priority at this point' — but it could soon start growing at a faster rate

• Olivia Fitzpatrick, 29, has $7,000 in student debt in Australia, but she's not too worried about it.
• Under the repayment system, she doesn't have to pay the loans until she reaches a certain income.

This story is part of a series called "Millennial World," which seeks to examine the state of the generation around the globe.

In the US, it's common for Americans to have six-figure student-debt burdens. In Australia, that hasn't been the norm.

Olivia Fitzpatrick, 29, has just over 10,000 Australian dollars, or about $6,790, in student debt — and even as a financial educator on social media, it's not a concern for her. That's because her loans are part of the Higher Education Contribution plan in the Higher Education Loan Program, or HECs-HELP, which ensures borrowers do not have to begin repaying their debt until they reach a certain income threshold — and during that time, the loans do not accrue any interest.

"I did consider paying it off early, however, it is not my priority at this point," Fitzpatrick told Insider. "I have a mortgage, am renovating my property, and invest regularly into the stock market, so for me, I am very happy to continue paying it down pretax, as I never see that money anyway. If I started earning significantly more over the next year, I would consider paying off the debt just for the feeling of having no student debt and also more cash flow from working."

Fitzpatrick said her student-loan balance was around AU$30,000 when she graduated in 2017 with a double degree in history and theology and started teaching at two universities in Melbourne. Thanks to the lack of interest accrual on HECs-HELP loans, Fitzpatrick's balance only grew slightly due to indexation, in which the balance is adjusted every year on June 1 to align with the current cost of living. She also started paying off the loans immediately when she began her entry-level teaching job, in which she was making around AU$64,000. The repayment income threshold for the 2022-2023 school year is AU$48,361, and according to the various levels of repayment, about 3.5% of her income is going toward her student loans.

"I honestly think many people don't notice their student-loan repayments coming out or really consider the impact of how it's reducing their cash flow and may continue to," Fitzpatrick said. "I really think more education around HECs-HELP in Australia is required to help people understand the debt they are taking on and how this can impact them. It does not seem to be a huge conversation here like it is in the US, which in a way is a good thing because perhaps that demonstrates it's not a huge burden on getting on financially, but I believe it also encourages lots of continuous study for limited reward in some cases."

While working now as a teacher, Fitzpatrick is also building an online financial-education community that she described as a "side hustle." She said she doesn't have any regrets about taking on student loans because it was a "great return on investment" for her.

"I am, however, thankful that I did not do any further study as I have been encouraged to multiple times by different people within and outside the workplace," she said. "I think more of a conversation needs to be had about whether your degree or further study will actually lead you to a better outcome, career-wise or financially."

Australian student-debt loads are on the rise

Fitzpatrick said she's found the Australian student-loan system to be "quite fair," and that "from an outsider perspective, it does seem like student-loan debt in America completely takes over people's lives and debt for many, many years. I do not believe it is the same situation for most Australians, therefore the conversation is not as large."

But that could soon change for many Australians. Currently, 3 million Australians collectively owe about A$74 billion in student debt, with an average balance of AU$24,000 — and that's set to climb due to the new 7.1% indexation rate, the highest in decades. One Melbourne millennial borrower told The Guardian that she graduated in 2018 with A$27,000 in student debt, and while she's paid off $2,900 of it since, her total balance has only gone down by $300 due to indexation.

"I've hardly made a dent to my debt," she said. "And with the new indexation rate, it'll increase and I'll end up with a larger debt."

This is a dilemma American student-loan borrowers are all too familiar with. Due to interest capitalization on federally held student loans, many borrowers that Insider has spoken to have been stuck in a cycle of repayment because interest continues to accrue on their principal balances, leaving them with much more debt than they signed on for.

And while the repayment systems in the US and Australia differ, the growing balances have lawmakers in both countries concerned. American student-loan borrowers are awaiting the fate of President Joe Biden's plan to forgive up to $20,000 in student debt for federal borrowers, and Mehreen Faruqi, a senator for the Greens party in New South Wales, has pushed for debt relief following the latest indexation hike.

"Refusing to act is negligent and just plain cruel," she said. "If the government refuses to provide a reprieve, the Greens will absolutely make this an election issue."

When considering the student-loan forgiveness conversation in Australia and abroad, Fitzpatrick said it's something that she'd "love" to happen.

"But I also understand that potentially there's more important things for the government to spend that money on rather than wiping my debt, which is relatively small and only comes out of my income when I am earning enough to repay it," she said. "I do, however, acknowledge those people who have much larger debts or are not using their degree or earning the threshold to actually start to repay it may feel quite differently."