Australian Student Debt to Soar on June 1 Due to HECS-HELP Indexation

Nearly 3 million students and graduates in Australia owe money for their tertiary studies, and on June 1, these debts will increase by between 4.2 and 4.8 percent due to HECS-HELP indexation. The indexation rate reached a decade high of 7.1 percent in 2023.

Accountant Hannah Pycroft is worried she'll never be able to pay off her growing debt, which has increased from $50,244.44 to $53,116.61 due to indexation. "It's just impossible to do anything about it. It's terrifying," said Baillie McWhirter, who has $50,000 in HECS-HELP debt from several degrees she was unable to complete due to a chronic illness.

There are calls for the federal government to freeze indexation on debts or reduce the indexation rate to match the Consumer Price Index or Wage Price Index, whichever is lower. The average HECS debt is currently $26,494, and the indexation increase could add $1,272 to that.

Prime Minister Anthony Albanese has acknowledged the issue and is reviewing the HECS system, hinting at potential changes in the upcoming federal budget. Some are calling for the indexation to be scrapped altogether, as it is seen as a heavy burden on those struggling with the cost of living crisis.

Why this matters: The skyrocketing student debt in Australia is creating a devastating financial spiral for millions of graduates. The government's handling of this issue will have significant implications for the future of higher education accessibility and the long-term financial well-being of young Australians.

New analysis shows that student debts in Australia are on track to increase by at least $12.3 billion during Labor's first three years in government, due to the high indexation rate set to hit student debts on June 1. Greens education spokeswoman Mehreen Faruqi has called on the Labor government to scrap the indexation to ease the burden, stating, "Student debt in Australia is spiraling out of control."

Key Takeaways

• Nearly 3 million Australians owe money for tertiary studies, with debts rising 4.2-4.8% on June 1.
• HECS-HELP indexation reached a decade high of 7.1% in 2023, adding to graduates' financial burdens.
• Calls for the government to freeze indexation or match it to CPI/Wage Price Index, whichever is lower.
• PM Albanese reviewing HECS system, hinting at potential changes in the upcoming federal budget.
• Student debts in Australia projected to increase by $12.3 billion in Labor's first 3 years in power.