Brutal HECS change looming for millions of Australians

From Saturday, millions of people across the country, including many young Australians, will be hit with a brutal increase in their student debt.

On June 1, anyone with an outstanding HECS-HELP loan will see their debt increase by a significant 4.7 per cent.

HECS-HELP debt is interest-free but is indexed to inflation each year.

Last year, the debt of those with student loans grew by a whopping 7.1 percent — the biggest jump in 30 years.

It comes as the Federal Government recently announced a plan to wipe out $3 billion in student debt for just under three million Australians.

The proposed change included in the May Budget will use a lower Consumer Price Index (CPI) or Wage Price Index for the indexation process. Currently, indexation is carried out in accordance with the CPI.

Legislation still needs to be passed for the change to take effect, but when it does, it will apply retroactively to 1 June 2023 and the revised indexation rates will be automatically added to people’s loans by the Australian Taxation Office.

This means that last year’s 7.1% indexation will be reduced to 3.2%, and this year’s indexation will be reduced by 4% instead of 4.7%.

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Despite the proposed changes, tomorrow’s indexation will still have a significant impact on the 2.9 million Australians currently burdened with HECS debt.

One of those Australians is a 24-year-old Queensland woman, Lauren, who currently has a HECS debt of $71,240.

The Townsville native is in the sixth and final year of her Bachelor of Medicine, Bachelor of Surgery. She has also completed a one-year Diploma in Nursing and is completing the first of two honors years.

Speaking to, Lauren revealed that the latter is a research degree and is highly recommended and “essential” to specialize in a chosen field.

“I have not started repaying [my HECS] because my degree requires me to practice regularly – at least 40 hours a week, 40 weeks a year,” said the young student.

“Often these shifts are much longer, including working six days a week and/or 14-hour shifts. That leaves no time for work.”

According to the government’s indexation assessor HELP, when the new changes come into effect, Lauren will receive a credit of $2,595 for last year’s indexation, bringing her debt down to $68,645.

However, the 4% increase for this year will mean an additional $2,745.80 added to her debt, and since the 24-year-old has not yet reached the earnings threshold to start repaying the loan, she will have an even higher debt of $71,390.80.

Despite the changes to HECS, Lauren says “it’s not enough” and more needs to be done to support students.

“We suffer from accommodation poverty. There is no way I could graduate while working,” she said.

“The fact that I don’t have exams this year and they’re charging me $9,000 to graduate is outrageous.”

Samantha Sakr is another young Australian who is sinking into tens of thousands of dollars in student debt.

The 27-year-old currently has more than $50,000 in HECS debt, which she has been paying off since 2018 after completing a degree in advertising, public relations and marketing.

While some feel the changes announced by the government do not go far enough, Samantha believes they are “a step in the right direction”.

“Many of us with HECS debts are looking to increase our tax returns and, more importantly, our savings,” she told

“Hopefully, when indexation is implemented this tax season, it will provide some much-needed financial relief.”

A recent Finder survey of 1,071 respondents – 271 of whom have student debt – found that more than 3 in 5 are slightly or very worried about their ability to repay their interest-free loan – up from 54 per cent last year.

The survey found that 12 percent believe they will never be able to pay off their student debt.

That’s more than 354,000 people who don’t believe they’ll be able to repay their student loans.

The outstanding HECS-HELP debt rose to just over $78.2 billion for the 2022-23 financial year, up from $74.3 billion in 2021-22.

More than half of those with student debt owe up to $40,000, 21 percent owe between $40,000 and $100,000, and just over 1 percent owe more than $100,000.

Richard Whitten, financial expert at Finder, told that despite the government’s changes, indexation will still “hit many Australians hard”.

“Four percent this year is still a fairly high rate of indexation. If your debt is in the tens of thousands, you are in for a big increase,” he said.

“Student debt is still less urgent debt compared to credit card debt, a personal loan or even buy now pay later. Always focus on high interest debts first.

“But with the cost of university rising and future indexation likely to be higher than the many low-inflation years we’ve had before 2022, people with student debt should consider paying some off if they can. “

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