Millions of Aussies will have hundreds of dollars wiped off their HECS debt after the government passed new laws that will change the way student loans are indexed each year.
About $3 billion will be deducted from more than three million Help loans, with about $1,200 repaid for the average $27,000 balance.
Refunds are now processed automatically by the ATO.
The new laws were introduced after Australians were hit with a massive 7.1 per cent annual indexation fee on June 1, 2023, after inflation rose to rates unseen since 1990.
From June 1 next year, HECS loans will be indexed in line with the Consumer Price Index (CPI) or the Wage Price Index (WPI), whichever figure is smaller, to ensure rates are not outpaced by wage growth.
The indexation percentage of 7.1 percent for 2023 and the indexation percentage of 4.7 percent for 2024 will also be changed to 3.2 percent and 4 percent, respectively.
Three million Aussies will see hundreds of dollars wiped off their HECS debts. Pictured are students at the University of Melbourne
Those who pay off their loans after the June 1, 2023 increase will receive a refund into their nominated bank account, provided they have no other existing tax debts.
A HECS debt, which includes HELP, VET Student Loan and Australian Apprenticeship Support Loans, of $15,000 will receive a credit of $670, a loan of $100,000 will be credited $5835.
Federal Education Minister Jason Clare said the new law would prevent Australians from being hit with high indexation fees due to inflation spikes.
“Now that the legislation has been passed, the ATO will automatically apply these credits as quickly as possible,” he said.
About $5,520 will be wiped off the average HECS loan of $27,000 after the government passes new laws that will change the way student loans are indexed
‘And there’s more to come. If we win the election next year, Labor will cut all student debt by a further 20 per cent and make repayments fairer.”
Ahead of next year’s federal election, Labor has also committed to canceling 20 percent of all student loans, amounting to around $16 billion.
This means that for an average debt of $27,000, approximately $5,520 is deducted from the outstanding amount.
Accounts with more than $60,000 will have more than $12,000 erased.