Yahoo Finance Aussies to get whacked with $1,734 HECS increase
HECS/HELP debt is indexed to the rate of inflation on June 1 each year.
Aussies who still have money remaining on their HECS/HELP debt are about to be hit with a major increase to their debt, come June 1.
On June 1 each year, student loans are indexed to the rate of inflation on the loan if it has remained unpaid for more than 11 months - so, if you’re not making voluntary payments, this would likely affect you.
The Australian Tax Office (ATO) was yet to release the indexation figures for 2023, however, quarterly inflation data for March 2023 was at 7 per cent.
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With indexation rates tied to inflation, Australians with student debt are looking at the biggest hike in decades.
The indexation rate last year was 3.9 per cent, meaning, on an average debt of $24,771, last year’s indexing added $966 on top of what was already owed, according to data from Finder.
This year, a person with the average-sized debt could expect to see $1,734 added to their loan if it was indexed at 7 per cent.
Those with a $30,000 debt could see $2,100 added to their loan, while those with a $40,000 debt could see $2,800 added.
A Finder survey of 305 Australians with student debt found one in two were slightly or extremely concerned about their ability to repay their interest-free loan. A whopping 14 per cent didn’t think they’d ever be able to pay off their debt.
According to the ATO, 15 per cent of Australians – equivalent to more than 3 million people – are riddled with student debt. This is up from 2.9 million in 2020–2021.
Of those in debt, 11 per cent had between $5,000 and $40,000, 3 per cent had between $40,000 and $100,000. Just 2 per cent had less than $5,000.
Finder money expert Rebecca Pike said Aussie graduates were feeling hopeless about the prospect of ever being able to pay off their loan.
“It’s a huge financial burden, especially for those who have taken out large loans,” Pike said.
“While inflation will drive up the cost of the loan, the good news is student debt is the least crucial loan you’ll ever have.
“If you can afford to, make a few small contributions here and there as it will lessen the load in the long-term and help you pay it off quicker.”
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