.png)
6 months ago
31
Millions of university students across Australia will save $1,200 on their debt repayments under measures to reduce the cost of living.
The federal government announced the changes on Sunday, which will cut the indexation of the Higher Education Contribution Scheme (HECS) and the Higher Education Loan Program (HELPS).
The cost savings are set to be announced in the budget on Tuesday, after it is introduced to parliament, and will help more than three million people reduce the cost of their loan repayments.
Millions of students, including trainees and apprentices (pictured) will have their student debt reduce after the government announced on Sunday, that the rate of indexation will be cut on
The move could mean that up to $3billion in student debt would be wiped off, helping university students, apprentices, and trainees to pay off their debt.
On average, the amount of money students owe to the ATO will be cut by $1,200 on their HECS and HELP debt.
How much will students save?
HELP DEBT
$15,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$100,000
$130,000
Estimated Credit
$675
$1,120
$1,345
$1,570
$1,795
$2,020
$2,245
$4,485
$5,835
The change will apply to all HELP, VET Student Loan, Australian Apprenticeship Support Loan and other student support loan accounts that existed on 1 June last year.
Indexation rates are added to loans students take out to pay for their higher education.
The rate is added to a HECS or HELP debt to take into account changes to the price of goods and services, which is measured in Australia by the consumer price index.
Federal Education Minister Jason Clare, said the government will change the way indexation to student loans are calculated.
'The Universities Accord recommended indexing HELP loans to whatever is lower out of CPI and WPI. We are doing this, and going further,' he told Newscorp.
The government has also backdated the change to June 1 last year, which means all student debs that were indexed in 2023 will also be reduced.
The measure was recommended by the University Accord which was set up to conduct a review into the higher education system in Australia.
The rate of indexation this year, which is 4.75 per cent will be cut to 4 per cent and the combined savings take $1,200 from a average HELP loan of $26,500.
'We will backdate this reform to last year. This will wipe out what happened last year and make sure it never happens again,' Mr Clare said.
Students with larger debts such as those with a HELP debt of $50,000 will have their repayments reduced by $2,245.
The government is set to hand down the cost savings the budget this month (pictured left Prime Minister Anthony Albanese and right Education Minister Jason Clare)
The move will also reduce student debts that were indexed in 2023, with the combined savings to reduce repayments by $1,200 on an average HELP loan of $26,500 (pictured university students on campus)
Skills and Training Minister Brendan O'Connor said by backdating this reform to last year, the government was ensuring last years' indexation jump would receive cost-of-living relief.
'This continues our work to ease cost of living pressures and reduce and remove financial barriers to education and training,' he said.
The indexation rate hit a massive 7.1 per cent last year as inflation hit an annual rate of 7 per cent, during the first three months in 2023.
Students owed $78 billion in HECS and HELP debt last year according to figures by the ATO, which was an increase of $4 billion from the previous year.
HECS and HELP are loans students can take out to pay for their tuition, with the amount funded by the government that will then need to be paid back.
Domestic students are eligible to access the program to obtain financial support from the Commonwealth.
English (US)