HECS debt to increase on June 1 as new indexation applied

More than three million Australians with higher education loans will pay more when the second-highest indexation increase on record is applied from June 1.

Outstanding HECS-HELP loans will jump by 4.7 per cent on Saturday, which is indexed annually by the Consumer Price Index (CPI).

That will mean more pain for those paying off student loans after an already expensive year of 2023, which saw a 7.1 percent indexation hike.

But the federal government plans to reduce the financial headache by reducing student debt by about $3 billion.

The measure will link the rate of indexation to the lower of the CPI or the Wage Price Index (WPI).

WPI is expected to overtake CPI by 2025.

Education Minister Jason Clare said that when the new legislation is passed “later this year”, people will see their loans backdated to June 2023 to allow for the new changes.

“If you have an average HECS debt of $26,000, you will see it reduced by about $1,200,” Mr Clare said.

“If you have a HECS debt of $45,000, it will drop by about $2,000.

“We are building a better and fairer education system and the changes introduced to HECS indexation are a big part of that.”

Mr Clare said the “old, unfair system” would be fixed by the new legislation and prevent future indexation from breaking out again, as it did in 2023 and 2024.

In the last financial year, the average HELP debt of $26,500 jumped by $1,881.50.

If the new rules took effect in 2023, student debt would be indexed at 3.2 percent — or $848 — instead of 7.1 percent.

Almost three million Australians have student loans.

Australians owed a total of $78.2 billion in HELP debt in the 2022-23 financial year.

Leave a Comment