Raid your super to pay off your uni debts? Here's why that's a terrible idea.

A plan to allow young Australians to pay back university debts using their superannuation is bad news for women.

Western Australian Liberal Senator Chis Back wants the Federal Government to change the rules so that people in their 20s and 30s can use their super to pay off their student debts.

But for women in particular, that could spell disaster.

Australian university graduates owe tens of billions of dollars in student loan debts to the federal government.

A woman earning the median wage will take, on average, 12 years to repay her HECS debt. (The government doesn’t call it HECS anymore, but that’s what it’s generally known as, so lets go with it.)

For a man it will take an average of eight years.

A quarter of all women with a HECS debt (and you don’t have to graduate to accumulate one) will never repay it.

And while everyone will make at least some repayments, the government assumes around 16 per cent of all HECS borrowers will never repay the full amount.

Women pay back less, over a longer period of time than men do.

Why? Because they earn less than their male counterparts, and they take time out of the workforce to have children which puts them even further behind.

Well in that case, you might say, isn’t it a good idea to let women pay off their student debt using their accumulated superannuation?

Hell no.

Because the flip side of the can’t-pay-off-my-education-debt coin is that women are also at a disadvantage when it comes to accumulating super.

All the things that affect your ability to pay off your HECS also help to determine how much superannuation you end up with.

Right now, the average woman retires with around half the super of the average man. Only 12 per cent of Australian women are confident they will have enough to retire comfortably.

Single women are worst off when it comes to financial security in retirement, and the most likely to need to lean on the age pension to keep them out of poverty.

They are also a growing segment of homeless people across the nation.

Government policy should be aimed at increasing a woman’s super balance, not depleting it during the early part of her career, leaving her to play catch up over the decades when she is most likely to be in and out of the workforce, or only working part time.

We already know there’s an income gap between men and women, and we also know it only gets wider as women hit the glass ceiling or stop climbing the ladder to take care of children.

They need to bank as much superannuation as possible, as early as possible. And then that money needs to be able to mature and grow until retirement.

It’s not a honey pot for the government to dip into.

I was lucky enough to pay off my HECS debt last year.

It was an amazing feeling, but it was also not something I actively pursued. I simply let the tax office deduct the minimum repayments from my salary each year, and eventually it disappeared.

I could have sunk extra money into it to speed up the process, but I took my accountant’s advice.

He told me that throwing my savings into HECS repayments was a stupid idea.

I was better off putting that money in the bank, where it would collect interest, or adding it to my superannuation, where it would help me later in life, or using it to pay off any other debts I might have first – like credit cards or personal loans.

Because HECS debts are not like regular debts. If you aren’t earning over the repayment threshold ($54,126) then you don’t have to pay. If you die, the debt is erased.

Your HECS debt also doesn’t attract interest. It is recalculated once a year using the consumer price index to “maintain its real value by adjusting it in line with changes in the cost of living”.

Watch: How should you pay off your HECS debt?

The main reason people try and reduce the time it takes them to pay off a debt is because interest rates can really bump up the total over time.

That’s not the case with HECS, which is a big reason why accountants like mine tell people to invest in savings and super.

The only beneficiary of ploughing your savings into your HECS debt is the government. But if the same people paying off their HECS debts are forsaking their retirement income to do so, at some point they will probably have to start leaning on the age pension, which makes you wonder if this isn’t really a zero-sum game for the government in the end.

Women are already behind when it comes to saving for our future.  A change like this would put us further behind.