An increase in indexation will see HECS debts rising across the nation for students and graduates.
The HECS (HELP) debt annual indexation will rise by 7.1 per cent on June 1 across Australia, with student debts increasing significantly.
It’s the biggest increase in 33 years and students can expect to see their debts rise by an average of $1,700.
While HECS is an interest-free loan, indexation is applied to the debt to maintain its real value and to align with the current cost of living and inflation.
Indexation is influenced by the cost of living which is measured through the Consumer Price Index (CPI). It is based on the Australian Bureau of Statistics' financial figures collected over the last two years.
The federal government has released the official HELP thresholds for 2023/24, which has increased from previous years. This means that From July 1, an individual will need to be making at least $51,550 to begin paying off their HECS debt. This may provide a sense of relief to some graduates, despite the overall debt increasing.
In 2022, the indexation rate was at 3.9 per cent, and during lockdown in 2021, it was at a staggering low of 0.6 per cent. Australia’s overall student debt will increase from $74 billion to around $80 billion after the indexation.
With the current inflation rate sitting at around 7 per cent, the cost of living continues to remain high and students are feeling the effects of this.
RMIT University student Lauren Richardson works 30 hours each week to support herself through university. She says the indexation rise places even more pressure on her generation.
“Between rising housing prices, inflation, the general cost of living and now the HECS indexation, it’s no wonder gen Z is poorer than the previous generations,” Richardson says.
“It’s like they’re setting us up for failure, apart from the few who are generationally wealthy.”
While some students are scrambling to pay off as much of their HECS as they can before June 1, others will continue to hope for inflation to stabilise to prevent more large indexation increases.
Photography: Lead image: Brook James. Article image: Supplied