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Cruel $1,200 HECS blow for millions of Aussies as debts grow again

The indexation of HECS debt is tipped to be the second-highest jump in a decade.

The indexation on HECS debt for this year has been forecasted to be the second-highest in a decade. People with student loan debt can expect an increase on indexation of 4.2 to 4.8 per cent, according to data calculated by the Parliamentary Library for the Greens.

The indexation rate is tied to the consumer price index (CPI), which is the most well-known indicator for inflation. Teal MP Dr Monique Ryan, whose campaign to change indexation has the support of more than 260,000 people, told Yahoo Finance the incoming increase will cause a lot of pain for many Australians.

"It just reflects the extent to which people are deeply distressed about this issue," Ryan said.

"The reality is that half of the people who get a HECS debt now carry it into their 40s and the unintended consequence of that is that it's actually affecting much of [peoples'] decision making."

MP Monique Ryan has expressed her disappointment as former students like Abbey are saddled with higher HECS debts.
MP Monique Ryan has expressed her disappointment as former students like Abbey are saddled with higher HECS debts. (Getty/Supplied)

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"It's a real active disincentive to people to making more [money] and to increasing their work hours and to re-engaging in the work market."


In 2023, the indexation rate went up by the largest amount seen in a decade at 7.1 per cent. The year before, it increased 3.9 per cent. That means Aussies with student debt have seen their loan indexed between 15.95 per cent and 16.62 per cent in the last three years, which equates to around $12.3 billion.


A 4.8 per cent increase in 2024 would see the average HECS debt, which is $26,494 according to Parliamentary Library figures, increase by $1,272.

The indexation will kick in on June 1 this year.

Greens education spokeswoman Mehreen Faruqi has called for the government to axe indexation altogether.

“Just talking about the cost-of-living crisis while ignoring the heavy burden of student debt is not going to ease the pain for anyone,” she said.

“University and TAFE should be free and all student debt wiped, but let’s start with abolishing indexation and providing some relief to people being weighed down by an ever ballooning debt.”

Aussies plead for help in HECS debt 'horror'

There's no denying that HECS debt is creating financial headaches for Australians across the country. Abbey O'Hagan graduated with a Bachelor of Business Marketing in 2021 and she feels that debt she took on when she was still very young is insurmountable.

"Unless you win the lotto, or maybe come from a wealthy family, it feels impossible for me, or the other young Aussies I speak with, to escape that horror that is the student debt looming over our heads," she wrote for Yahoo Finance.

"I spent thousands of dollars last year with the pay-as-you-go (PAYG) option, which meant a large chunk of my wage vanished fortnightly. But when I checked my balance again after the massive indexation increase, I owed $800 more than last year.

"I paid thousands to merely tread water."

Abbey smiling over her shoulder.
AbbeyAbbey paid thousands toward her HECS debt, only to find indexation erase all her hard work.

O'Hagan's story is all too familiar. Some fear the debt is stopping them from getting a home loan, others are outraged by the wages they are offered in return for accumulating the education tab.

Young Australians have told Yahoo Finance they worked up to 230 extra hours to pay it off in bulk, and have sacrificed being able to save for a house to pay it down instead.

This could be why more than 260,000 people have signed Ryan's petition to overhaul HECS.

The independent member for Kooyong has heard shocking stories too.

People delaying their university education because they're worried about taking on massive amounts of debt, some Aussies feeling they have to hold off on having a family due to the amount of debt they have.

"The downstream effects of people carrying bigger HECS debts for longer are really accumulating and it's having more than more of an impact," Ryan said.

What are people meant to do with increasing HECS debts?

Prime Minister Anthony Albanese hinted there could be relief coming for those with student loan debt.

“I think there’s a range of areas we need to do much better for the younger generation, and HECS is one of them,” he said on Triple M Central Queensland.

But no solid plans have been released.

Ryan encouraged people to sign her petition because it will continue to press the government to take action.

"Politicians are listening," she explained to Yahoo Finance. "I say to people tell your local member about this. These sorts of stories are incredibly powerful and impactful."

For people who are really struggling there are options available. Ryan said you can negotiate with representatives from the Treasury about your repayments "if you're really in dire circumstances".

Aussies have to start paying off their HECS debt once they start earning over $51,550 a year. A small percentage of your wage will be allocated to HECS every pay cycle, and it goes up 0.5 per cent every $4,000-5,000 more you make.

For example, if you earn between $66,876 and $70,888, 3.0 per cent of your salary goes to HECS. That goes up to 3.5 per cent if you're earning between $70,889 $75,140. The highest rate is 10 per cent and that's for people earning over $151,201 a year.

Government 'horrified' but what are they doing about HECS?

When the MP's petition was just at 90,000 signatures, she presented it to education minister Jason Clare.

She wanted to give the man in charge of the problem an idea of how many people are being affected by the debt they took on as teenagers.

"I described to him a number of specific examples that I'd heard in my electorate, and he was really struck by them," Ryan said.

She recalled meeting one woman who had started working at a supermarket in her 60s because she wanted to help one of her children pay off their HECS debt that had ballooned out to $170,000.

"I told Jason Claire that and he was a bit horrified and I said, 'This is not what it's supposed to be trying to achieve'," Ryan explained.

"It's reasonable to ask people to contribute to the cost of that education when they're able to but we didn't expect that it would become such a millstone around the neck and then it would affect life decisions to the extent that it is now."

She warned the education minister that HECS debt will be a big election issue and they better be ready for some solutions.

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