December 11th 2024.
Today, Australians who are still paying off their student loans have received some welcome news from the Labor government. As part of their debt reduction measures, the federal government has announced that they will be wiping $3 billion in HECS-HELP debt from Australian student loans. This change is thanks to adjustments in how indexation is applied to these loans.
For former students who have an average HECS debt of $27,000, this means that they will receive a credit of about $1200 towards their outstanding loan. This will come as a relief to many who have been struggling to pay off their debts. In fact, the indexation change has been backdated to June 2023, meaning that those who have already paid off their HECS debt in 2023 or 2024 will receive the credit as a refund in their bank accounts.
Last month, legislation was passed in the Senate to change how annual indexation on student debts is calculated in Australia. Previously, it was based on the Consumer Price Index, which caused loans to increase by 7.1 per cent last year. However, the new method will now take into account the lower of the CPI or the Wage Price Index, providing some relief for those with student loans.
Minister for Education Jason Clare explained that this change was recommended by the Universities Accord and that the government has not only implemented it, but has also gone a step further by backdating the reform to last year. This means that the impact of last year's surge in loans will be wiped out and will not happen again in the future.
For Australians with a student debt loan, they can easily check the reduction in their debt by logging onto their Australian Tax Office account via MyGov. This user-friendly platform provides easy access for individuals to keep track of their loans and any changes made.
But the good news doesn't stop there. The Albanese government has promised even bigger changes to student debt if Labor wins the upcoming federal election. In fact, they have pledged to reduce HECS debt by a further 20 per cent, which would mean that a graduate with an average HELP debt of $27,600 would see around $5520 wiped from their outstanding loan. This would also apply to other income-contingent loans such as the Vet Student Loan and Australian Apprenticeship Support Loan.
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