‘Ripped off’: Australians rage as millions hit by brutal HECS spike

A few days ago, millions of Australians across the country were hit by a brutal increase in their student debt.

While HECS-HELP debt does not accrue interest, it is indexed for inflation on 1 June each year.

It means the loans of the 2.9 million Australians currently saddled with HECS debt rose by a significant 4.7 per cent on Saturday.

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

Adelaide speech therapist Laura O’Loughlin, who experienced years of debt growing faster than she could pay it off, was hit particularly hard by the latest indexation.

By the time the 31-year-old finished her degree, she was $107,000 in debt, accumulated through what she described as “pretty standard medical degrees.”

She completed her BA and Honors in Science in order to “boost” her grades so that she could enroll in the Master’s program she wanted, which was an MSc in Speech-Language Pathology at Flinders University.

That alone costs $60,000 for a two-year degree, which Laura says is “an absolute joke”, calling it one of the most expensive degrees in Australia.

Do you have HECS debt? Share your thoughts: alexandra.foster@news.com.au

This left her with more than $100,000 in debt, not including her student loan.

The SSL is a voluntary loan of $1,273 for eligible students receiving Youth Allowance, Austudy or ABSTUDY Living Allowance.

You can get a loan up to twice a year, with the amount borrowed being added to your HECS debt.

By June 1, 2023, Laura had only managed to pay off $1,000 of her debt, bringing her total to $106,000.

“And that’s after working full-time for five years for reasonable pay,” she told news.com.au.

“So, in my opinion, we are basically just the most spoiled generation. There are simply so many problems with this system. The fact that I’ve only managed to put $1,000 into my HECS/Student Starter Loan on a full-time salary is crazy to me.”

This will be the first year she has been able to cut into her HECS after setting up her own business and moving into a higher tax bracket.

As a result, she was recently able to contribute significantly to paying off her debt, bringing it down to $89,000. However, it still weathered the indexation hike of $4,000 on Saturday.

Aussies erupt for brutal HECS bounce

Since Saturday, Australians have taken to social media to express their outrage at the resurgence of their debt.

One X user, who goes by the name @amaegazooma, shared a screenshot of her debt, revealing that it had increased by $5,928 and now stands at $132,071.

Another user, @laterkatersays, revealed that she has paid $31,480.89 towards her HECS debt over the past eight years.

“In that time, the total balance has only decreased by $19,624.39. And all the free-educated Boomers are wondering why we can’t afford home deposits,” she wrote.

Another university graduate, Jack Boddeke, revealed his debt had increased by $1,400, writing: “Why are we penalizing people for getting back into education?”

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 to apply the change – which won’t happen until later this year – but when it does, it will be backdated to 1 June 2023 and the revised indexation rates will automatically be added to the revised indexation index. Australian Taxation Office People’s Loan.

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%.

However, many people, including Laura, are not keen on this proposal.

She described the proposed changes as “paltry” and questioned why Australians should be “jumping for joy” at a change that will not provide nearly enough relief for people with large HECS debts.

She said it was “pocket change” compared to the extent of some people’s loans.

The 31-year-old also believes HECS indexation unfairly affects women, pointing out that women who take time out of the workforce to have children see their debts increase every year without being able to pay them.

“If I had a child now, I would go back. I think it also directly contributes to people’s decisions about whether or not to have children because we have to worry about that on top of everything else and of course your HECS also affects your ability to borrow,” she said.

She believes the growing burden of HECS is creating another problem that is emerging for those working in the health space.

Laura said many people, like herself, are moving into the private health space to increase their incomes and start paying off their debt.

“It also directly contributes to the shortage of staff in the government sector because the government is not paying enough to fight indexation,” she said.

“Had I stayed on my government salary, my debt would still be growing this year.”

Laura added that a similar situation is also developing in the teaching area, when people have to leave the profession due to low salaries.

Sydney native Léa is another young Aussie struggling to pay off her HECS debt.

The 23-year-old graduated with a Bachelor of Advanced Science from Macquarie University in 2022, with a HECS debt of $25,474.

As of today, their debt is $24,031, an increase of $1,078 with the last indexation.

“So even though they put $4000 in since graduation, it’s only gone down $1000,” Léa told news.com.au.

Although they consider the changes proposed by the Albanian government to be a “good start”, it is “still not enough”.

“My salary only went up 3 percent this year, not 4.7 percent, so the increase in debt is not really representative of how much we’re getting in salary increases,” they said.

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, money expert at Finder, told news.com.au indexation would still “hit many Australians hard” despite the government’s changes.

“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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