Aussies with student loans are being urged to log into their Australian Taxation Office (ATO) accounts to check their HECS debts. The government’s recent changes to student loan indexation have now kicked in, with credits being applied to millions of accounts nationwide.
Government Legislation and Indexation Changes
The federal government passed legislation last month to change the way student loans are indexed, capping the rate to whichever is lower between the consumer price index (CPI) and the wage price index (WPI). This change, backdated to June 1, 2023, has led to a $3 billion reduction in student debt for over three million Australians.
How to Check Your HECS Balance
The ATO has sent out a text message encouraging those with student loan debts to check their balance online. Aussies can now see how much has been deducted from their balance for the 2023 and 2024 financial years.
Education Minister’s Statement
Education Minister Jason Clare stated that the Universities Accord recommended indexing HELP loans to the lower of CPI or WPI. “We have done this, and gone further. We have backdated this reform to last year. This wipes out what happened last year and makes sure it never happens again.”
Impact on HECS Debts
In 2023, HECS debts were indexed at a significant 7.1%, one of the largest increases in years. With the new changes, indexation is reduced to 3.2%. For 2024, the rate is lowered from 4.7% to 4%, with credits applied via the ATO.
Estimated Reductions
For someone with an average HELP debt of around $27,000, approximately $1,200 will be taken off their outstanding loan. Those who fully repaid their debt after the 2023 or 2024 indexation was applied will receive a credit processed as a refund to their bank account.
| HELP Debt at June 30, 2023 | Total Estimated Credit for 2023 and 2024 |
|---|---|
| $15,000 | $670 |
| $25,000 | $1,120 |
| $30,000 | $1,345 |
| $35,000 | $1,570 |
| $40,000 | $1,795 |
| $45,000 | $2,020 |
| $50,000 | $2,245 |
| $60,000 | $2,690 |
| $100,000 | $4,485 |
| $130,000 | $5,835 |
Future HECS Reforms
The government has also announced a $16 billion plan to cut all student debt by an additional 20% if re-elected next year. This would reduce the average HECS debt of $27,000 by $5,520.
Teal MP Dr. Monique Ryan commented, “The structural problems in the system, which are the timing of indexation and how much degrees cost, are not being addressed by this legislation. So if you started this year and you don’t yet have a HECS debt, this is not going to help you at all.”
Aussies are encouraged to check their ATO accounts to see the impact of these changes on their HECS debt and to stay informed about future reforms that may affect their student loans.
