There’s About to Be $3 Billion of Student Debt Wiped
What the HEC does this mean for me?
Good news for past and current tertiary students with a HECS debt. The legislation to change HECS indexation has passed parliament – wiping a whopping $3 billion in student debt for over three million Australians.
It’s taken a little while but this bill dates back to May when Federal Education Minister Jason Clare announced the gov. wanted to put plans in place to help with the cost-of-living.
The legislation changes the way indexation is calculated on student debt and will be backdated to 1 June 2023.
This means that the Universities Accord (Student Support and Other Measures) Bill 2024 caps the HELP indexation rate to either the Consumer Price Index (CPI) or the Wage Price Index (WPI) – depending on which is lower.
For example someone with an average HELP debt of around $27,000 will see around $1,200 wiped from their outstanding HELP loans.
In a survey we conducted earlier this year, we asked young aussies if they knew how much their HECS debt will be or was going to be at the end of their degree. 40.7 per cent said they had no idea of the total HECS debt, 33.6 per cent said they have some idea of their total HECS debt and only 25.7 per cent said they had a good idea of their total HECS debt.
How will HECS change?
Indexation is normally calculated based on the Consumer Price Index (CPI).
Annual HECS indexation will now be calculated based on whichever figure is lower: the CPI or the Wage Price Index (WGI).
- CPI: This measures household inflation and includes statistics about price changes for categories of household expenditure. It’s calculated by the Australian Bureau of Statistics (ABS) who collect the prices of thousands of items which are grouped into 87 categories and 11 groups.
- These could include items such as health, transport, recreation and clothing.
- Every quarter the ABS calculate the price changes of each item from the previous quarter and compare them to what they were. They then add up all these changes to see how much the overall cost-of-living has gone up or down.
- WPI: This measures the changes in wages and salaries in the Australian labour market over time. Similarly to the CPI, it follows changes in the hourly rate paid to a fixed group of jobs.
What does this mean for me and my HELP debt?
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If someone has completely repaid their student debt after 2023 or 2024 indexation was applied, the credit will be a refund to their bank account (assuming they don’t have any outstanding government debts).
You can find out how much this debt slash will be estimated to benefit you, using the HELP Indexation Credit Estimator here.
This bill also includes other policies to make life for students easier.
The Bill supports the Commonwealth Prac Payment from 1 July 2025 for around 68,000 higher education teaching, nursing, midwifery and social work students to help support them financially while they complete their prac.
Plus, it’ll expand the FEE-FREE Uni Ready Courses to help more people get a crack at university and succeed when they get there.
The federal gov says this is just the first stage of their reforms to make HECS fairer. The Labor Government plans to cut a further 20 per cent off all student loan debts, raise the minimum repayment threshold for student loans and cut repayment rates (if they win the next federal election).
If you want to see how much you owe in HECS debt, login to your myGov account.
This article was originally published 19 August 2024 and has since been updated.
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