Millions of Aussies get a $1,200 boost for their HECS/HELP debt – here’s what you need to know
- Millions of Aussies are getting a $1,200 boost
- University students with HECS/HELP debts benefit from this
Millions of university students across Australia will save $1,200 on their debt repayments thanks to measures to reduce the cost of living.
The federal government announced the changes on Sunday, which will see the indexation of the Higher Education Contribution Scheme (HECS) and the Higher Education Loan Program (HELPS) reduced.
The cost savings will be announced in Tuesday’s budget after it is presented to Parliament and will help more than three million people reduce the cost of their loan repayments.
The student debt of millions of students, including trainees and apprentices (pictured), will be reduced after the government announced that the indexation rate will be reduced
The move could wipe out up to $3 billion in student debt, helping college students, apprentices and interns pay off their debt.
On average, the amount students owe to the ATO will be reduced by $1,200 from their HECS and HELP debt.
The change will apply to all HELP, VET student loans, Australian Learner Support Loans and other student loan accounts in existence on June 1 last year.
Indexation rates are added to the loans students take out to pay for their higher education.
The rate is added to a HECS or HELP debt to account for changes in the price of goods and services, which in Australia are measured by the Consumer Price Index.
Federal Education Minister Jason Clare said the government will change the way student loan indexation is calculated.
The government announced the changes on Sunday, with the cost savings set to be included in this month’s budget (pictured with Prime Minister Anthony Albanese on the left and Education Minister Jason Clare on the right)
The move means the amount of debt students (pictured) have to pay to the ATO will be reduced, saving them an average of $1,200 on their HECS and HELP debts.
‘The Universities Accord recommended that HELP loans be indexed to whatever is lower than the CPI and WPI. We will do this and move on,” he said News Corp.
The government has also reversed the change to June 1 last year, which means that all student debt indexed in 2023 will also be reduced.
The measure was recommended by the University Accord, which was set up to conduct a review of Australia’s higher education system.
This year’s indexation rate, which is 4.75 percent, will be reduced to 4 percent and the combined savings will cost $1,200 of an average HELP loan of $26,500.
“We will roll back this reform to last year. This will put an end to what happened last year and ensure it never happens again,” Mr Clare said.
For students with larger debts, such as those with $50,000 in HELP debt, the interest debt will be reduced by $2,245.
Minister for Skills and Training Brendan O’Connor said that by reversing this reform to last year, the Government was ensuring that last year’s indexation jump would provide cost-of-living relief.
“This continues our work to ease pressure on the cost of living and reduce and remove financial barriers to education and training,” he said.
The indexation rate reached a huge 7.1 percent last year, while inflation reached an annual rate of 7 percent in the first three months of 2023.
Students had $78 billion in HECS and HELP debt last year, which increased by $4 billion from the previous year.
More to come